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SME “life cycle” imperative


This article will analyse and review Australia’s Small and Medium Enterprise (SME) taxation framework vis-à-vis the United States of America (USA) and the United Kingdom (UK), with a view to determining whether Australia should be modifying its approach to the preferential tax treatment of SMEs. SME taxation policy in Australia has been formulated by successive governments without having a full appreciation of what a SME’s needs and requirements are. The importance of understanding more about SMEs so that resources can be better targeted in this sector has also been recognised as an issue in the USA. This global SME tax policy problem arises for a number of reasons including; the fact that the SME sector comprises a significant number of entities that are at varying stages of their business life cycle; small firms are heterogeneous in nature; and not all tax concessions or subsidies will suit all firms in the SME sector. These factors make it difficult to set appropriate tax policy which can then be consistently applied across all firms in this sector.

Accordingly, this article focuses on detailing an alternative approach to SME tax policy formulation having regard to a SME’s business life cycle. This article will review the literature in relation to the various business life cycle models, with specific emphasis on their application to SMEs. It will then identify the principal SME business life cycle models, and adopt one of these models for the purposes of identifying the relevant factors that should be
taken into account when formulating SME tax policy.

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Current at 04 June 2009 Click here to expand/collapse more articles by Mark PIZZACALLA.


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