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Australia will face record insolvencies, fewer entrepreneurs and weaker competition without decisive action on tax reform and red tape reduction, the advocacy group has warned.
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COSBOA lobbies for modernised tax system, red tape reduction
29 January 2025
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7 minute read
The Council of Small Business Organisations Australia (COSBOA) has urged the government to implement both tax reform and red tape reduction to drive economic growth and protect the viability of small businesses.
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COSBOA told the government in its pre-budget submission that without bold action, Australia would risk entrenched inflation, reduced competition, and declining living standards.
The advocacy group wants to see the tax burden on small businesses reduced and for the tax system to be simplified and streamlined to make it more accessible to small businesses.
The pre-budget submission proposed a permanent and larger instant asset write-off, a lower company tax rate for small businesses and a reduction in the administration tax burden.
The submission said the government could also consider implementing a tax holiday or lower tax rate for new businesses with appropriate avoidance measures.
“COSBOA considers that many small businesses face significant challenges when interacting with different state-based taxes.”
“This is particularly the case in relation to payroll tax where the variation in thresholds, rates and administrative requirements creates complexity and unnecessary compliance costs.”
The submission said a harmonised approach to payroll tax with standardised rates and thresholds across jurisdictions would significantly reduce administrative burdens allowing small businesses to focus on supporting their customers.
“COSBOA submits that taxing employment through payroll taxes is counterintuitive and discourages small businesses from employing more staff,” it said.
It also urged the government to restore the technology investment boost to improve cyber resilience and digital innovation for small businesses.
The submission has also called for a range of red tape reduction initiatives such as simplifying processes with agencies like the ATO and Fair Work Commission through the creation of a user-centric government system.
There should also be mandatory provisioning of small business impact statements before any new policy proposal is brought before cabinet, it added.
COSBOA chief executive Luke Achterstraat said a perfect storm of rising costs, slowing demand, and mounting regulatory pressures were putting immense strain on small businesses – many of which were family-owned and built on personal sacrifices.
“Without urgent reforms, we face record insolvencies, fewer entrepreneurs, and weaker competition. Ultimately, this means higher prices and lower living standards for all Australians,” Achterstraat said.
Achterstraat noted approximately 49 per cent of small businesses are currently not breaking even and additional pressure will push many more over the edge.
“Australia risks losing a generation of entrepreneurs because it has become too hard and costly to run a small business. The consequences of inaction will affect every Australian household.”
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