Publication date: 06 May 19 |
Source: THE TAX INSTITUTE
Small business in favour and large business out in tax announcements at Labor campaign launch
Sydney, 6 May 2019:
Deduction for small business with turnover of less than $10 million on wages for employees under 25 and over 55 for up to 5 employees
In response to this measure, The Tax Institute’s President, Tim Neilson, says, “This measure will give small businesses an extra 30% deduction for wages paid to certain under 25 year old and over 55 year old employees and carers returning to work.
“Small business taxpayers would welcome the introduction of this tax break. This measure supports small business and will help encourage small businesses to take on more employees.
“Should Labor win the upcoming election, The Tax Institute looks forward to working with Labor to ensure this measure is integrated smoothly into the tax system.”
Crackdown on multinationals – targeting royalties
In response to this measure, Mr Neilson says, “The proposal will deny a tax deduction for the payment of royalties by an SGE to a related party and yet tax will also be withheld on the payment of the royalties, effectively resulting in double taxation on the revenue being distributed as royalties.
“We already have a plethora of tools in the Australian tax system armoury that target tax avoidance by multinationals, including the MAAL, DPT, thin capitalisation rules, transfer pricing rules, Double Tax Agreements and general anti-avoidance rules.
“The MAAL has been in effect since 1 January 2016 and the ATO has reported seeing the positive impacts on corporate revenue collections since then with multinationals on-shoring significant amounts of sales revenue. The DPT has only been in effect since 1 July 2017. It is still a little early to fully understand the impact of the DPT on corporate revenue collections. Any extension to these rules needs to be carefully targeted to deal only with identified gaps in these measures.
“It is not at all clear to The Tax Institute what gaps have been identified by the Labor party. Further layering of more legislation will only complicate an already complex set of laws and worse, may deter foreign multinationals from establishing or expanding their operations in Australia. We need more detail about what this measure will address that isn't covered by existing measures in the Australian system or by work on international tax on IP being carried out through the OECD.
Care needs to be taken not to kill the goose that lays the golden egg.”
For more information, please contact: Noha Shaheed Ahmed, Media Relations: 02 8223 0039.
The Tax Institute is the leading forum for the tax community in Australia. Our reach includes membership of 12,000 tax professionals from commerce and industry, academia, government and public practice and 40,000 Australian business leaders, government employees and students. We are committed to representing our members, shaping the future of the tax profession and continuous improvement of the tax system for the benefit of all, through the advancement of knowledge, member support and advocacy. Read more at taxinstitute.com.au