Turnbull Committed To 25 Percent Aus Company Tax

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

07 April 2017

Australian Prime Minister Malcolm Turnbull has said his Government is committed to delivering its company tax package in full.

Turnbull made the pledge during a speech at the Sydney Institute. He said that the legislation passed last week will cut company tax for 3.2 million SMEs, which collectively employ 6.5 million Australians.

"We have now delivered every tax cut we promised for this term of government – just as we set out at the election," Turnbull added.

On March 31, the Senate passed legislation to phase in three years' worth of changes to the company tax system. It will raise the maximum turnover threshold for the small business company tax rate from AUD2m (USD1.5m) to AUD10m from the 2016-17 financial year. The company tax rate for these businesses is retrospectively reduced from 28.5 percent to 27.5 percent from July 1, 2016, and the unincorporated tax discount is increased to eight percent. The turnover threshold will increase to AUD25m in 2017-18 and to AUD50m in 2018-19.

The Government's original proposals 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.

Turnbull said the Government is "committed to delivering our full company tax policy," and that it will "continue to work hard to secure the support of the cross-bench for that."

"Treasury modeling shows that once fully implemented, our policy will permanently increase the size of the economy by more than one percent – that's more than AUD17bn in today's dollars, every single year."

Turnbull warned that failure to pass the package will have consequences for the Australian economy. He noted that the UK has reduced its corporate tax rate to 19 percent, and plans further reductions to 17 percent by 2020, while US President Donald Trump is seeking a 15 percent rate.

He argued: "We cannot pretend that Australia will be able to compete successfully for capital, business investment, and jobs if the cost of doing business here is so much higher than in comparable countries."

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