Small to medium enterprises will benefit from the federal government's plans to lower the corporate tax rate to 28 per cent and provide an immediate tax deduction for assets that are less than $5,000.
Small to medium enterprises will benefit from the federal government's plans to lower the corporate tax rate to 28 per cent and provide an immediate tax deduction for assets that are less than $5,000.
Deloitte said in a statement today that small businesses will welcome these measures and will also look forward to further announcements from the government.
Small business will benefit from the corporate tax rate reduction earlier than the rest of corporate Australia for which the tax rate will reduce to 29 per cent on July 1 2013 and to 28 per cent on July 1 2014.
The Henry review has recommended that the corporate tax rate be reduced to 25 per cent over time.
"Companies would welcome further tax relief as it has been recognised in the Henry Review that Australia's corporate tax rate is currently too high when compared to other similar sized OECD countries", said Deloitte tax partner David Pring.
The Henry Tax Review has recommended further small business concessions for which the government is yet to announce its response. These measures are:
- The small business entity turnover threshold should be increased from $2 million to $5 million and consideration should be given to adjusting the $6 million net asset value test under the small business CGT concessions (Recommendation 30)
- Companies should be allowed to carry back revenue losses to offset against prior year's taxable income, with the amount of the tax refund limited to the company's franking account balance (Recommendation 31)
- The rules around the taxation of trusts to be updated and rewritten to reduce complexity (recommendation 36)
- A flow through tax entity regime for closely held companies should be considered in the future for closely held companies and trusts (Recommendation 38)
"Small Business will welcome further announcements in this regard as they will assist in reducing tax complexity and increase fairness. For instance, allowing the carry back of tax losses would be extremely beneficial to SMEs as it would allow them to obtain cash refunds of tax already paid to the Tax Office," Deloitte private tax partner Spyros Kotsopoulos added.
Meantime, Pitcher Partners partner Ray Cummings said the asset write-off will apply to businesses with a turnover of less than $2million, which will be able to write off such business expenses under $5,000.
"While it will benefit those micro businesses, the measures haven't gone far enough. Given that the SME market is $2M to $250M turnover covering 85 per cent of enterprises in Australia, the government should have at least adopted Henry's recommendation to increase the threshold in small entities from $2M to $5M," Mr Cummings said.
