Friday, May 12, 2006
Peter Costello’s budget announcement has led to rejoicing for small businesses, but the lack of joy for those pushing for radical corporate taxation reform has led to many businesses asking “what about us?”
Personal taxation and small business have been the big winners after this year’s federal budget. Although dampened by the twin economic threats of rising interest rates and petrol prices, there should be a reasonable amount of real income savings for both low and high income earners, with those receiving Medicare, or a superannuation benefit, privy to an even lower level of taxation (0% for those on super benefits).
Small business also has benefited from the Howard government’s 11th annual budget, with them receiving a higher level of reducing depreciation, leading to a higher level of deductions in the years following the uptake of new technology or other capital. They are also privy to a AU$435 million dollar tax cut to compensate for their changing accounting requirements under the government’s new AIFRS reporting standards, as well as increasing the uptake of both the small business tax relief scheme and CGT (Capital Gains tax) Concessions.
The budget was not a complete loss for big business however, as superannuation laws have been tweaked to streamline contribution and payment rules previously impeding those with multitudes of staff.
But this is not enough, says Big 4 accounting firm Ernst & Young. In their newly published paper “Taxation of Investment in Australia: the need for ongoing reform”. In it they lead the charge for a greater streamlining and organization of the corporate tax system in Australia, submitting that it will lead to reductions in “disincentives to work save and invest in Australia [as well as improving] the international competitiveness of Australian businesses.” This follows from a recent report brought out by Mr. Costello himself about the need for tax reform in Australia.
A budget night Mr. Costello was notably coy about any future reform of corporate tax in Australia. He alluded to the report by his ministers but kept from outlining the government’s plan precisely.