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Australian Businesses Call For Tax Cut

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

26 October 2017


Organizations representing both Australia's small and large business communities have called on parliament to pass the Government's proposed company tax cuts.

The Council of Small Business Organisations of Australia (COSBOA) and the Business Council of Australia (BCA) have joined forces to urge the adoption of the Government's full package of company tax reforms.

Speaking during a joint press conference, BCA Chief Executive Jennifer Westacott argued that "the business community is one interdependent community," and that there is "no small business without big business, there's no big business without small business."

Peter Strong, Chief Executive of COSBOA, had a similar message. He said: "If big business isn't investing, if big business isn't building things and creating new opportunities, then that means small business as a group will find less opportunities."

Legislation passed earlier this year reduced the small business tax rate from 28.5 percent to 27.5 percent, effective from July 1, 2016. It also increased the maximum turnover threshold for access to this rate from AUD2m (USD1.6m) to AUD10m for 2016-17, to AUD25m from 2017-18, and to AUD50m from 2018-19.

The Government had sought to phase in further increases to the SME threshold each year to 2023-24, with a reduction in the 27.5 percent rate to 25 percent for all companies by 2026-27. It failed to pass its package in full, but has reintroduced legislation to this effect.

According to the BCA, restricting the tax cut to businesses with a turnover of up to AUD50m a year "leaves the job half done." It argued that this is a two-tier system that will limit the overall economic benefits that could flow from the reforms and will "create distortions and become a disincentive for companies to grow."

Westacott warned that Australia is now at risk of having the third-highest company rate in the world. She stressed that the tax system "needs to encourage investment in Australian jobs, not dissuade it."

TAGS: tax | investment | small business | business | corporation tax | Australia | tax thresholds | small and medium-sized enterprises (SME) | legislation | tax rates | tax reform | trade association | trade

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