Publication date: 10 May 00 |
Source: THE TAX INSTITUTE
The Federal Treasurer should be thanking Australian companies today for providing an additional $7.1 billion in revenue in the next financial year due to the new pay-as-you-go system (PAYG). Without this windfall gain, the budget would have been a staggering $4.3 billion in deficit."Despite a drop in the company tax rate to 34% in the 2000-2001 financial year, the Government is set to raise an extra $7.1 billion in company tax from Australian companies because of the bringing forward of payments under PAYG," said Taxation Institute of Australia President, Mr Ray Conwell.
"Every Australian company, large and small, will be forced to contribute large sums of company tax up to 15 months earlier than required under the previous company tax instalment system."
"This means that in the next financial year, they will be paying the current year's company tax plus up to 75% of 2000-2001 company tax in a single year."
"This may squeeze the life out of a number of businesses, particularly new small enterprises, who have come to rely on the previously delayed payments system to enable them time and money to cover set-up costs and initial business investment. It will have a major impact on the cash flow of all companies," he said.
The additional $7.1 billion of revenue from companies which the PAYG system has transferred into the 2000-2001 budget raises questions about the credibility of the budget surplus.
"This impost on companies has certainly resulted in creating a budget in the black rather than the red. The PAYG schedule merely shifts the collection date of revenue rather than the generation of a greater volume of revenue this situation can only be sustained for one budget," said Mr Conwell.