We know small business owners are desperate for some serious tax relief and it looks like there is hope on the horizon. The whole country is set to gain from more than three million small businesses having a lower tax rate, allowing them to invest more, grow more and employ more, Small Business Minister Michael McCormack says.
“We know lower taxes means small businesses can grow, pursue new ideas and create more jobs,” says McCormack.
Tax relief on the way
The change was confirmed in an extended Senate session under a deal struck by the Government with the Nick Xenophon Team and will cost $5.2 billion over the next four years.
It will mean businesses with turnovers of up to $10 million will pay 27.5 per cent this financial year. From July 1, companies with turnovers up to $25 million will pay 27.5 per cent and, from 2018-19, the tax rate will apply to those with $50 million annual turnovers.
Global market place
The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) complied a statistics report which brings together data and analysis from a range of sources including the ATO, ABS and Austrade, and has been released to mark the office’s one year anniversary.
“This report provides a unique insight into the sector; it ultimately reinforces the size and importance of the small businesses to the Australian economy, and outlines its growing diversity,” says Ombudsman Kate Carnell.
Carnell says the number of small business currently venturing into offshore markets is on the rise. While many small businesses are at the cutting edge of innovation, she has made it clear that she would like to see more small businesses go down this path.
“Encouragingly, ABS data shows more and more small businesses are entering export markets, with 44 per cent of goods-exporting firms classified as small business. Many are also entering the global market place at an early stage of their development, giving rise to the ‘born-global’ phenomenon,” she adds.
THIS VITAL TAX CUT IS A CONFIDENCE BOOST FOR HARDWORKING AUSSIES
Positive step forward
In 2016 a survey by MYOB revealed more than half (56 per cent) of small businesses believed that lowering the company tax rate to 27.5 per cent for businesses with up to $10 million in revenue would have a positive impact.
“It’s good that those barriers to growth have been removed. The old system discouraged SMEs to grow beyond $2 million in revenue because of the benefits they lost from being counted as a small business,” says McCormack.
“We hope the Government is able to secure support for its ongoing programme of company tax cuts. The simple fact is that lower corporate taxes across the board would have made Australian business more internationally competitive.
“For every dollar small business spend with big businesses, big businesses spend $2 with small businesses. This is the nature of the economic ecosystem we have – and we need the whole thing to be healthy.
“I know this vital tax cut is an important injection of confidence for the hardworking Australians in small business who contribute $380 billion to our gross domestic product,” says McCormack.