Small business Minister Bruce Billson has announced red tape reductions to ease tax compliance costs for SMEs by up to $56 million a year.
Speaking to the G20 Agenda for Growth in Melbourne on Friday, Mr Billson announced three areas in which the government was looking to cut red tape costs for smaller operators.
1) Tax: Mr Billson said the government was “working up” a measure to reduce the compliance burden imposed by the pay-as-you-go (PAYG) tax instalment system.
The pay-as-you-go (PAYG) tax instalment system is used by small businesses to put aside portions of tax throughout the financial year. These instalments are assessed at the end of the financial year when a tax return is finalised to determine whether the business is owed a refund or whether its tax payments need to be topped-up.
Mr Billson said about 372,500 small businesses would benefit from administrative changes to the PAYG instalment thresholds.
The changes will mean about 32,500 small businesses will no longer have to lodge a business activity statement (BAS) simply to report their PAYG instalments. This means that about 340,000 small businesses will still be required to lodge a BAS, but will not have to interact with the PAYG instalment system.
“By simply reviewing thresholds that are more than a decade old, we can cut the red-tape burden which lands most heavily on small business,” he said.
2) Standard Business Reporting (SBR): Mr Billson said the government would “encourage” the availability of SBR-enabled software to the SME sector and its usage across government agencies.
SBR-enabled software allows businesses to complete most of their reporting requirements directly from their accounting or payroll systems. It reads financial data from a business’ accounting system, pre-fills forms with the required information and allows the business owner to check for accuracy. The information is then delivered to the appropriate government agency through a secure online channel.
“Businesses can use their SBR software to easily report information, rather than manually reporting multiple times in multiple formats,” Mr Billson said.
3) ATO interaction: Mr Billson said the Australian Taxation Office (ATO) and Treasury were working to reduce red tape costs by developing new digital platforms.
The ‘Enabling Digital by Default’ initiative would allow employees to authorise the ATO to send their tax file number, superannuation details and bank account directly to an employer’s software.
An employer could then use a “Single Touch Payroll” platform to immediately complete a range of reporting and payment obligations, including staff payments, PAYG (withholding) and payment summaries.
Mr Billson said the function could potentially be extended to cover other non-Commonwealth obligations such as payroll tax and workers compensation reports.
“The ATO and Treasury are consulting with stakeholders around the red tape reduction opportunities that are possible in a Digital world and the strategies to support Digital adoption by business,” he said.
In his address, Mr Billson also addressed a number of issues affecting Australia’s start-up sector. He said the government was looking at how crowd-funding could be a “vibrant alternative” for funding small business and described peer-to-peer lending as a “promising alternative source of debt finance”.
On the issue of employee share schemes, Mr Billson said the government wanted to overcome “barriers and disincentives” to SME participants sharing ownership of the enterprise.