Small Businesses In Australia Set For Tax Cuts

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

16 December 2008

The Australian government has announced that it will be reducing taxes for over one million of the country's businesses next year.

Describing the decision as a move which will "help Australian small businesses to weather the global financial crisis," Prime Minister Kevin Rudd explained that the measure would work by cutting the quarterly pay-as-you-go (PAYG) installment due on January 21, 2009 or February 28, 2009 by 20%.

The reduction will be available to small business entities – generally those with aggregated turnover of AUD2m (USD1.3m) per annum or less.

It is anticipated that the move will offer some much-needed relief to around 1.3 million of the country's small businesses who are currently struggling to operate due to the strains of the global financial crisis.

According to the government, the 20% cut allocated to February's installment will provide immediate cash flow relief to small businesses, consequently increasing their confidence.

While there is flexibility in the existing provisions that allows taxpayers to vary installments down of their own accord, many small businesses are reluctant to do so, especially those with unpredictable income streams.

The government's latest announcement comes just days after it unveiled plans to implement a AUD10.4bn 'Economic Security Strategy,' which has been designed to strengthen the economy, boost confidence and support jobs.

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