Small business taxpayers, in particular those described by the Australian Taxation Office as micro-businesses, struggle with red tape and the over-weening requirements of tax administration. As a complete aside, I have never liked the term “micro-business” because it appears to be pejorative; for those who run the business, there is nothing bigger in their lives and for those who depend on the business for employment, it is of crucial importance. Perhaps we could call them “very important businesses” (VIP businesses) to capture the essence of their significance for the Australian economy.
Members may recall that, way back in May 2012, The Tax Institute hosted a roundtable discussion on the definition of small business as it appears in a plethora of legislation, both state and federal. Just as examples, the definition is relevant in Fair Work, WorkCover and social security. The meeting was attended by senior representatives of governments, including the Assistant Treasurer, Mr David Bradbury, and the Shadow Minister for Small Business, Mr Bruce Billson, and Mr Rob Oakeshott. The roundtable puzzled about the problems associated with defining small business over such a broad range of measures. There was some early support for a unique small business entity for tax purposes.
In discussions at a later meeting with Mr Bradbury, it became clear that the then proposed Small Business Commissioner, to be appointed by the federal government, would be a critical pathway to sorting out the miasma of legislative definitions.
Mr Mark Brennan was nominated as the Commonwealth’s Small Business Commissioner on 17 October 2012 by Mr Brendan O’Connor, the Minister for Small Business. By all accounts, Mr Brennan is very experienced in the role as he held a similar position with the Victorian Government for some seven years. Mr O’Connor put it this way:
“Not only does Mr Brennan have a vast amount of experience and knowledge, he also understands that government needs frank and objective advice and the small business community needs strong advocates.”
The tax and small business interface will be very challenging for Mr Brennan. Small business operators often think that the tax policy debate is driven by the “big end of town” and that their concerns are unheard. It is thought that Treasury and the ATO have had the policy ground to themselves and that, while there have been moves to make life easier for small business, there is much to be done. The ATO is also perceived of by many small business people, as recounted in their discussions with our members, as being ruthless in pursuing tax debts of small business operators who are struggling with changing economic conditions.
The role that Mr Brennan will commence in January 2013 is principally to engage in advocacy for the small business sector, rather than dispute mediation. This is where his office may be able to wreak change to the tax system, thus benefiting our VIP businesses. It will be very interesting to see how his office opens up as a third force to promote changes which will benefit not only the small business community, but also the broader economy. In addition, it will be of great interest to see how those government departments which have had a perceived monopoly in the field react to the newcomer.
For our members, the Small Business Commissioner should be kept in mind, not to intrude on legal disputes with the ATO, but to help fix the nightmarish administration problems that arise when dealing with the present system and to steer towards a simpler tax system for all.
Ken Schurgott is President of the National Council at The Tax Institute.
The Tax Institute is Australia's leading professional association in tax. Its 13,000 members include tax agents, accountants and lawyers as well as tax practitioners in corporations, government and academia.