11 October 2018
Business SA welcomes the Federal Government’s announcement today that it will bring forward tax cuts for small to medium-sized businesses with less than $50 million turnover, reducing the rate to 25 per cent by 2021-22, five years ahead of schedule.
As the state’s peak chamber of commerce, we have long called for Australia to keep pace with cuts to corporate tax rates, particularly when countries such as the UK already have a 19 per cent company tax rate reducing to 17 per cent in 2020, and the US has recently reduced its rate from 36 per cent to 21 per cent.
Coming from a small to medium-sized business state, where 98 per cent of our businesses employ fewer than 200 people, the fastest growing employers in the country are SMEs and it is logical to bring forward already agreed reductions to ensure we remain internationally competitive.
Business SA Chief Executive Nigel McBride said that Business SA had pushed strongly in recent years to extend the proposed company tax threshold to $50 million, to enable all businesses to be more competitive.
“We are pleased to see the Federal Government’s decision today will assist those businesses even further by fast tracking the benefit from a reduced company tax rate,” Mr McBride said.
“From our quarterly surveys of business expectations, company tax and payroll tax are the key taxes constraining SME growth. A recent report by Alpha Beta also provided preliminary evidence that the first tranche of tax cuts introduced in July 2015 are already showing some small, but statistically significant, signs of boosting investment and employment numbers amongst small businesses.”
Mr McBride said while it was evident in our surveys that South Australian business confidence had increased since the state election, along with general business conditions, the decision today would help convert that improved confidence to an increase in investment and jobs.
The tax cuts will benefit more than 100,000 South Australian companies and unincorporated businesses.
“Australia’s top company tax rate of 30 per cent is eight per cent above the OECD average of just under 22 per cent, which means we have been uncompetitive for some time,” Mr McBride said.
“Expediting the cuts would begin to level the playing field for our exporters, particularly while they deal with the otherwise high costs of doing business in Australia, including battling excessive power and water costs.”
To arrange an interview or for further information, please call Verity Edwards on 0412 678 942.