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Small business concessions should be a key priority of the government to ensure a “holistic review” of the Australian tax system, BDO has said.
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BDO calls for overhaul of small business concessions
07 February 2025
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7 minute read
In its 2025–26 pre-budget submission to parliament, BDO has noted small business concessions as a prominent area needing increased focus to help achieve holistic tax reform.
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The firm recommended a review of the suite of small business income tax concessions and small business capital gains tax concessions in reference to the 2019 Board of Taxation review.
Specifically, BDO said the government would need to conduct an alignment of the aggregated turnover thresholds for the small business income tax and capital gains tax concessions for ease of application.
“BDO would like to see efforts made to simplify the small business CGT concessions making them clearer and more appropriate for application in practice by small businesses and their owners,” the submission said.
“In particular, the $6 million maximum net asset value test has been an area of significant complexity and much contention.”
BDO noted it had been calling for a “holistic review” of the Australian tax system for many years, as in popular opinion there was a need to produce an unambiguous tax system that provided a fair and efficient means of revenue for the federal and state governments.
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The submission also recommended an ongoing consideration of tax reform driven by the establishment of an independent ‘Tax Reform Commission.’
The firm said the main priority of the Tax Reform Commission should be to ensure that tax reform remains ongoing to avoid outdated methods and arising issues.
“This Commission should incorporate the Board of Tax’s role but having a wider remit covering both Federal and State taxes,” BDO said.
“There should be a statutory requirement on Federal and State Governments to document and publicly publish, within a reasonable timeframe, their consideration of the Commission’s recommendations and reasons for accepting or rejecting the recommendations.”
In addition to small business concessions, the submission outlined several other key recommendations the government should consider regarding tax reform.
Recommendations included the reduction of corporate tax rates, a review of the superannuation contribution caps and a review of the application of CGT Event E4 to interests in unit trusts.
According to BDO, extensive reviews into these areas would help achieve the “meaningful and holistic tax reform” the firm and wider tax profession anticipated.
“Wholesale tax reform is vitally important to ensure that the tax system in Australia is fit for purpose in collecting sufficient tax revenue to fund essential government activities, while ensuring that tax is being collected from the most appropriate sources, maintaining Australia’s attractiveness as a destination for business and investment, and in maximising productivity,” BDO said.
“Until a holistic review of the Australian tax system is undertaken there are numerous issues with the existing Australian tax system that require consideration.”
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