Australia’s 1.3 million small businesses will receive a tax break to the tune of $440 million from the Federal Government. Businesses with a turnover of less than $2 million per annum will be eligible to defer 20 percent of their Pay As You Go tax instalment for the December quarter when it next falls due in January and February 2009.
Because the instalment is calculated on expected tax payable, not having to pay the amount until actual income is calculated will enable better cash flow for businesses, says Minister for Small Business Craig Emerson.
“At the end of the financial year there will be a reconciliation so if [business] profits actually were up then they’d pay a bit more tax and if they were down they wouldn’t,” he says. “The main benefit of it is that it’s a $440 million boost to the cash flow of small businesses at a time when it’s likely to be very useful.”
Emerson says the move is designed to boost the viability of small businesses and as a means of keeping 3.5 million employees in work.