accountantsRus comments on Federal Budget
accountantsRus , an Australian accounting network, has commented on the Federal Budget released tonight by the Treasurer Peter Costello and states that the budget has forgotten about small business.
Small business misses out:
With no reduction in the company tax rate of 30%, accountantsRus feels that small business are the losers yet again in the Federal Budget. While the individual income tax cuts were welcomed, small business tax reform has been long overdue in this country for years.
There has been no change in the 30% tax rate for a number of years now and small business is desperately needing a tax cut as it is their major expense.
accountantsRus argues that a reduction in the company tax rate would be the trigger required for Australian businesses to undertake investment in new plant and equipment and research & development expenditure.
Individual tax return obligations:
accountantsRus agreed with the reduction in income tax preparation time for a section of the taxpayers. The ATO have been able to access figures relating to wages, interest, dividends and private health cover for a number of years now, so it makes sense that the return be drafted by them.
However those taxpayers thinking about their tax obligation being reduced should be cautious.
There are a number of taxpayers that earn other income such as rental income, managed fund investments and capital gains (on sale of shares & property) that will need to lodge a more detailed tax return. And those that claim work related expenses for car, self-education and other deductions for donations and tax agent fees, may be missing out on a bigger refund.
accountantsRus suggests that even bigger refunds may be missed out by individuals not claiming rebates such as net medical expenses because they failed to see a tax agent.
accountantsRus thinks that the basic income tax preparers, such as ITP and H & R Block, will lose a large portion of their business overnight. They would have seen a dramatic impact caused by e-tax over the past few years and this will impact further.
Child care rebate:
The payment of the 2005/06 and 2006/07 rebates in the next financial year was welcomed by accountantsRus. It made no sense previously that families had to wait potentially up to 20 months before they received this rebate. By being a year in arrears caused a lot of confusion and worry among families.
GST reform:
accountantsRus was surprised that there was no adjustments made to the GST legislation, another area which significantly impacts small business owners. accountantsRus feels that maintaining the same threshold level will make more business owners immersed in paperwork or that existing businesses will elect to close operations.
Other business reform:
Other small business areas that accountantsRus feels should have been identified for revision for businesses include:
Definition of large companies within Corporations Law ($10M in turnover; $5M in assets);
Car depreciation limit ($57,009);
Low value pool depreciation ($1000);
Threshold for Reportable Fringe Benefit ($2,000);
Fringe Benefits Tax (FBT) levels such as in-house benefits ($1,000) and minor benefits ($300);
Small business Research & development (R & D) concessions (turnover less than $5M);
Threshold for eligible R & D Expenditure ($20,000);
Tax free component of employee share plans under s139E ($1000);
Small business CGT concession (for businesses with active assets under $5M);
Threshold of large, medium & small employers for PAYG Withholding obligations ($1m/mth and $25,000/mth);
Simplified tax system (turnover under $1m).
While it is commended that the future has been considered in the past two Federal Budgets (via Simpler Super, the Future Fund and Endowment Fund), there has been no assistance for those business owners that currently drive the economy.
28-May-2007