SME considerations for tax law

At The Tax Institute’s recent National Convention, much of the discussion and technical output was focussed on the multitude of tax issues in the SME sector.

As politicians love to say, small business is the backbone of the Australian economy, responsible for approximately half of all private sector employment of the Australian workforce.

However, as demonstrated by the raft of tax issues raised and discussed at National Convention, the SME sector continues to be strangled by excessively complicated tax laws which are themselves littered with cumbersome "integrity provisions". We remain concerned with this complexity and continue to advocate for the need to consider the unique investment, business and funding considerations that arise in the SME sector when writing tax laws.

To this end, we recently made a submission to the Productivity Commission with respect to their inquiry into "Regulator engagement with small business".

In our submission we highlighted the need to:

  • consider the impact of ATO practices and procedures; 
  • consider the effectiveness of tax measures intended to benefit small business; and 
  • maintain momentum on simplifying complex tax laws (such as Division 7A, taxation of trust income provisions in Division 6 and the personal services income rules).

In addition to the above, we call for an examination of creating a separate entity for small business, that is, an entity into which existing structures can be rolled over, allowing for the benefits of discretionary trusts (such as streaming and the CGT discount) and/or retention of profits. Such an entity will corral many currently available tax advantages into one entity that can be administered more simply and effectively by taxpayers, tax agents and the ATO alike.

We look forward to continuing our engagement on these issues in the months to come.

Robert Jeremenko

Robert Jeremenko CTA is Senior Tax Counsel of 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.


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