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Australian Gov't To Reintroduce Company Tax Cuts

by Mary Swire,, Hong Kong

27 April 2017

Australian Treasurer Scott Morrison has confirmed that he will reintroduce the Government's proposed tax cuts for large companies.

In an address to a conference in Sydney, Morrison said the Government believes that its full Enterprise Tax Plan should be implemented. He will reintroduce the remaining elements of the package when Parliament reconvenes for the Budget on May 9.

On March 31, the Senate passed legislation to phase in three years' worth of changes to the company tax system. The legislation raised the maximum turnover threshold for the small business company tax rate from AUD2m (USD1.5m) to AUD10m, effective from the 2016-17 financial year. The company tax rate for these businesses was retrospectively reduced from 28.5 percent to 27.5 percent from July 1, 2016.

The turnover threshold will increase to AUD25m in 2017-18 and to AUD50m in 2018-19.

Morrison said these tax cuts back SMEs "and help them to invest more, employ extra staff, and pay higher wages – putting more money in the pockets of hard-working Australians."

The original Enterprise Tax Plan had covered a period of 10 years, and included further increases to the SME threshold each year until 2023-24, and a reduction in the 27.5 percent rate to 25 percent for all businesses by 2026-27.

During his speech, Morrison noted that the US Government has outlined plans to cut the corporation tax rate to 15 percent, while the UK intends to reduce its rate to 17 percent, and French Presidential candidate Emmanuel Macron favors a 25 percent rate.

"More favorable tax rates in the US, UK, Europe, and Asia puts further pressure on our ability to attract investment and for our businesses to remain competitive. Failure to maintain our tax competitiveness will cost jobs and see investment go offshore," he argued.

TAGS: tax | investment | small business | business | corporation tax | Australia | United Kingdom | tax thresholds | ministry of finance | offshore | small and medium-sized enterprises (SME) | legislation | tax rates | United States | tax reform | Europe

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