The Henry Tax Review signals big returns for small businesses, with cuts to company tax and long overdue changes to depreciation write off thresholds.
“The Government’s tax package recognises that the vast majority of businesses operating in Australia are small businessesi and that’s a very important starting point for tax reform,” said CEO Jaye Radisich.
“The new tax measures are set to help improve small business cash flow, support increases in production and productivity and promote innovation and entrepreneurial activity.”
But despite the gains through the proposed company tax cut and the improved depreciation arrangements, the Council of Small Business remains concerned that the landmark tax changes are tied to the new 40% Resource Super Profits Tax (RSPT) which is dependent on the RSPT being passed by the Senate.
Small business company tax cut
“A reduction in the company tax rate is good news for small business companies,” said Jaye Radisich.
“Although the Henry Review recommended a company tax cut down to 25%, a reduction from 30% to 28% will still provide a strong cash flow boost for many small business companies.
“The ‘head start’ in the company tax rate cut being offered to small businesses means that small businesses will benefit from the cut in three years’ time instead of four.
“It is likely that the reduction in the company tax rate will encourage more entrants into the small business sector, and thereby promote innovation and entrepreneurial activity and grow jobs.”
Depreciation changes
“The depreciation changes announced today will significantly enhance small business cash flow and will decrease the compliance costs of tracking assets for the purposes of depreciation,” said Jaye Radisich.
“It would be ideal if the instant write off threshold could be implemented in the 2010/11 budget, rather than having to wait until 2012/13.
“Naturally small businesses would have preferred an increase in the instant write-off threshold to $10 000 as recommended by the Henry Review, however the $5000 threshold represents a significant improvement on the current arrangements.
