Publication date: 21 Sep 99 |
Source: THE TAX INSTITUTE
The Taxation Institute of Australia today welcomed positive steps taken by the Government towards bolstering the viability of small business into the new millenium through a combination of tax reform measures targeted specifically at small business, and much welcomed CGT reform.
"Overall, small business is a winner under the Government's proposed New Business Tax System, announced by the Treasurer today in response to the release of the report of the Review of Business Taxation, A Tax System Redesigned," according to Taxation Institute of Australia President, Mr Gordon Cooper.
"Tax should no longer be a hindrance to the competitiveness of small business to the extent that it is at present. Small businesses operating through entities subject to the corporate tax rate will benefit from the lowering of their tax burdens over time with a reduction of the company tax rate from 36% to 30% by the 2001-2002 income tax," he said.
"Individuals owning small businesses will be able to exit these businesses with more money in their pockets, with full CGT exemptions for longer term business assets, and reduced exposure to CGT on other business assets."
In addition, the Tax Institute is pleased with Government initiatives which will see small businesses with annual turnovers of less than $1 million excluding GST looking forward to significant reductions in the complexity of tax on a number of fronts, coupled with the reduction in compliance costs including:
Greater access to a cash accounting regime should not only be more straight forward and less costly, but may also help to offset some concerns about the impact of PAYG on the cash flow of small businesses who currently have to account for their taxable income and hence their tax on an accruals basis; A simpler and more generous depreciation regime will dramatically streamline the asset records of small business; and Stock takes in order to value stock for tax purposes will become a thing of the past for many small business.
"A disappointment is the decision to change the current 13 month repayment rule to less than 12 months. This means many expenses such as insurance paid in the June for the 12 months ending the following June will be held over as a deduction until the following year. This will add to compliance costs through year end adjustments working against the compliance savings from a cash system," Mr Cooper said.