Tax Forum Proposals For Small Business: Tax

Tax forum proposals highlight small business struggles

By Michelle Hammond
Monday, 03 October 2011

Business groups have lined up to put forward a raft of proposals for the federal government’s Tax Forum, which is set to kick off tomorrow, although some ideas are more likely to make headway than others.


The Canberra forum will bring together nearly 200 representatives from business, industry groups, superannuation funds and unions.


According to treasurer Wayne Swan, “nothing is taboo” at the forum, although he has indicated that any proposals pertaining to the GST are unlikely to get much airtime, having ruled out any changes to the tax.


Swan said the forum is not geared towards reinventing the tax system, and has warned that tax reform is more difficult in the current economic climate.


“It means we can’t just talk about cutting or abolishing certain taxes without looking at the other side of the equation – things like closing loopholes and getting rid of unnecessary tax expenditures,” he said.


StartupSmart has provided a wrap-up of the various proposals to be considered at the forum:



Despite Swan’s comments regarding the GST, the Australian Retailers Association is calling on the government to consider broadening the tax and lowering the Low Value Imports Threshold.


According to ARA executive director Russell Zimmerman, the government should consider the prospect of broadening the GST base to compensate for reducing or removing inefficient state taxes currently imposed on business.


These include payroll and insurance taxes, stamp duty and conveyance duties.


“The forum is a good chance for state premiers and treasurers to ensure the GST is working for them and achieving all possible revenue,” Zimmerman says.


“This will inevitably entail a lowering of the LVIT so states are able to gain valuable revenue towards future infrastructure and viability.”


“Removing state business taxes needs to be considered as a revenue-neutral measure for state governments… The ARA is also supporting calls for company tax cuts for retailers.”



In a bid to prop up the ailing sector, the Tourism and Transport Forum will push the idea of accelerated tax depreciation, designed to boost new tourism ventures and refurbish existing ones.


According to TTF chief executive John Lee, one of the main reasons Australians shy away from domestic travel is the “lack of investment in product and experiences”.


Lee says the current capital works depreciation regime applying to tourist accommodation, where a building is written off over 25 years, does not reflect the reality that hotels have a shorter operational life.


He is calling for an additional 50% deduction bonus as a short-term incentive for three years, with the remaining balance spread over 12.5 years.  


Peter Strong, executive director of the Council of Small Business of Australia, sees the forum as an opportunity to remove compliance demands on small businesses.


“I will be at the forum arguing our case for simplicity and supporting member organisations such as the Real Estate Institute of Australia and the Institute of Public Accountants,” Strong says.


“We will argue hard for [the] removal of red tape, and recognition of the difference between big and small business.”


Institute of Public Accountants

The IPA believes small business income should receive preferential income tax treatment to reflect the risks of running a business and compensate for the disproportionate compliance costs.


According to the institute, a differential rate of income tax should apply to small business irrespective of the legal structure being used to operate the business.


Chief executive Andrew Conway says the measure could be funded by streamlining and removing existing small business income tax measures.


“We believe that it would be more beneficial for small business to have access to a lower tax rate than the existing plethora of inefficient concessions,” Conway says.



According to shadow small business minister Bruce Billson, the Gillard Government must use the forum to explain why it decided to scrap the Entrepreneurs’ Tax Offset as part of the Federal Budget 2011.


“The Gillard Government is effectively raising taxes for Australia’s 400,000 smallest businesses who, on average, claimed less than $500 of ETO benefit, with 70% of claimants receiving less than $600 out of a maximum possible tax offset of $2,500,” Billson said in a statement.


Billson said the ETO provided a 25% discount on a small firm’s annual income tax liability on turnover of up to $50,000 and ceased at $75,000 turnover.


“At the tax forum, the Prime Minister can either stand up for Australia’s smallest businesses or persist in stripping the sector of modest measures,” Billson said.

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