Let’s talk about tax.
With the Federal Government’s announcement of the date for the expert panel to meet and discuss the Henry Tax Review, many business owners might be thinking “so what, a political review is just another way of saying we are thinking about doing something without actually doing anything”!
The Henry Review is different.
The content of the Review has largely been skimmed over since it was presented in May 2010 but in reading it you can’t help be impressed by the level of detail and how Mr Henry has considered everything in his 138 recommendations.
Let’s look at three of the recommendations and what they might mean for a business owner.
The incremental increase (.25 a year) in the compulsory superannuation guarantee from 9% to 12%
This will be borne by the small business owner and will need to be factored in to wage negotiations with current and new staff. It will have an impact on cash flow but keep in mind that our superannuation savings were a key contributor to maintaining a stable economy during the GFC.
The cut in corporate tax rate from 30% to 28%
While this sounds good, the reality is that the majority (more than 70 percent) of Australian businesses are not corporations and won’t be affected. But tax cuts sound good on TV. If you are a sole trader you can ignore this one.
A simplification in the number of State taxes
The Review called for the following taxes to be abolished and a simpler approach taken. The taxes included: insurance, payroll, property transfer, motor vehicle stamp duty, resource royalties, luxury car, superannuation contributions, income tax on government pensions and allowances, fuel and vehicle registration tax. This was an excellent recommendation that was largely ignored by the Federal Government last year but it would make life much easier for business owners in the future.
Whatever comes from the expert panel and is proposed as legislation, we hope that the interests of the small and medium business owners are taken into consideration and the more painful measures are balanced with reforms that make business life easier.
What do you think about the proposed Henry Review changes – good or bad for your business? What would you like to see that would make your business life easier?