Australia Eases Compliance Burden For Small Firms

by Mary Swire, Tax-News.com, Hong Kong

14 November 2006

Australian Treasurer Peter Costello has announced that the government will introduce legislation to standardise the eligibility criteria for small business tax concessions from 1 July 2007.

Under current rules, separate eligibility tests exist for GST, the Simplified Tax System, capital gains tax (CGT), fringe benefits tax (FBT) and pay-as-you-go (PAYG) small business concessions.

As a result of yesterday’s announcement, any business with annual turnover of less than $2 million will be able to access any of these concessions, Costello explained in a statement.

"Small businesses will only have to apply one eligibility test to access a range of small business concessions. This demonstrates again the Government’s commitment to reducing red tape and compliance costs for small businesses," said the statement.

Small businesses meeting the $2 million annual turnover test will not need to make any further decisions to enter into the new arrangements, nor will they be obliged to adopt any concessions not suited to their requirements. Any business meeting the new small business definition will be able to choose those concessions that meet its business needs.

A single definition of small business will result in reduced compliance costs for some 2 million Australian small businesses, or 96% of all Australian businesses, Costello claimed.

The government will be consulting on the draft legislation in early 2007.

According to Costello, the change represents a tax cut of $150 million to small business.

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