SYDNEY, 23 March 2022: The Tax Institute welcomes the Government’s announcement today to cut compliance costs and provide cash flow support for small business as they recover from the impact of COVID-19, closed borders and the recent floods.
‘Capping the GDP uplift rate for PAYG Instalments and GST instalments to 2% for the 2022-23 financial year is a welcome move in the present environment. An uplift of 10%, which the Government indicates would otherwise have been the case, would be an unnecessary burden on many small businesses,’ says Scott Treatt, The Tax Institute’s General Manager, Tax Policy and Advocacy.
The Government says this cap will mean $1.85 billion in cash flow support for 2.3 million small to medium businesses, sole traders and individuals with passive income who are eligible to use the instalment amount method.
‘While this is welcome relief, small business owners should continue to work with their tax advisors throughout the year to manage cashflow and look at all of their options when it comes to paying their tax and GST obligations. For some businesses who have recovered, capping the increase at 2% for instalment payments may only defer higher costs until the final payment at the end of the year. They will need to plan for this,’ Scott says.
Government are also increasing efficiency through measures such as facilitating pre-filling of payroll tax returns through data sharing, allowing eligible businesses the option to report taxable payments reporting system data via software at the same time as activity statements and developing systems to allow trusts the option to lodge income tax returns electronically.
‘Being smarter with technology is also welcome. Being smarter about how the ATO collects information, and what they do with it, is only a good thing and this will be a welcome reduction in compliance costs,’ Scott says.
In its landmark report, the Case for Change, The Tax Institute argued for centralising the collection and administration of employment taxes by a single regulator. The move to use Single Touch Payroll (STP) data to prefill state payroll tax returns for business is a big step in the right direction.
‘More collaboration between the State and Territory governments and the Federal government can only bring compliance savings to business. I’m glad we’re seeing this start to take shape,’ Scott says.
‘We look forward to working with the government and their agencies through their consultation processes to ensure the greatest level of efficiency for small business is drawn from these measures.’