Small to medium-sized businesses have been calling for the disproportionate tax compliance burden they bear to be reduced for some time. This joint report, produced by Deloitte and the Institute of Chartered Accountants in Australia (the Institute) aims to generate debate on solutions to the complexities and compliance costs of the taxation regime for small to medium-sized enterprises (SMEs).

The report suggests an alternative regime that treats SMEs as partnerships; that is, ignores the operating entity and taxes the profits in the hands of the owners of the business – an entity flow-through (EFT) taxation regime.

Under the EFT regime, there is no need for integrity measures such as Division 7A, carry-forward company loss provisions, fringe benefits tax (FBT) provisions, the consolidation regime, family trust election provisions, trust loss provisions or franking credit rules. The regime also provides an alternative to the use of trusts – and the significant complexity and integrity issues associated with them.

Read more (PDF 81KB).

Related links:

• media release - Help for small businesses overburdened by complicated tax law 
• podcast – Ali Noroozi, Institute Tax Counsel, talks to Deloitte Tax partner, Alexis Kokkinos, about the report