Industry Update: Board of Taxation has requested feedback from small businesses
The Board of Taxation has completed a review of small business tax concessions that was announced earlier this year. The goal of the review was to examine the existing concessions for business owners and recommend any improvements or new approaches to reduce the burden for businesses.
The Board of Taxation held public consultation sessions in Sydney, Melbourne, Adelaide, and Canberra in late July and early August. Written submissions were accepted in addition to the public sessions.
The Board looked for answers to several questions, including these core questions:
- What tax issues are of particular concern for small businesses?
- What do you regard as the most useful or effective small business tax concessions? Why?
- What opportunities do you see for improving existing small business concessions?
- Which current small business concessions are not working and/or should be removed? Why?
- What ideas do you have for new concessions that could help small businesses?
The Board also asked questions regarding reform principles, business structure, eligibility criteria, and technology. Many accountants and business owners attended the consultation session, and the Board received 37 written submissions.
The review brought up concerns regarding the complexity of concessions and the public knowledge of them. Stakeholders feel that there is not enough support during the start-up and survival phases of a business, and the tax concessions are too heavily skewed at the end of the business life-cycle. Definitions and thresholds for small businesses are too complex and confusing.
Regarding tax and regulatory compliance, many business owners feel that the burden is significant, and there is an enormous impact on small business owners.
HLB Mann Judd partner, Peter Bembrick, spoke to Accountants Daily: “We agree that there is a lack of understanding of the range of concessions, and that some of them are quite complex, both to determine eligibility and, if eligible, to apply, which adds to the feeling amongst small business owners that they bear a disproportionate compliance burden.”
Bembrick hopes that the results of the review mean that the Board of Taxation will look at the various definitions of small business, which currently causes confusion and can lead to errors or fewer concessions claimed. He is also optimistic about the eligibility thresholds, which currently removes incentives for growing businesses.
Bembrick stated, “While recognizing the government’s revenue constraints, an increase in these thresholds at some point would be welcome, and perhaps some phasing in of the thresholds so that there is not such a stark difference in outcomes for businesses just under and just over the limits, which may reduce the disincentives for people to keep growing their businesses.”
As always, Scott Partners will stay updated on any changes coming to small business tax concessions and other considerations that will affect our clients. We hope that the results of this review will bring many welcome changes to the small business community.