SMEs to wait for major tax reform
10 May 2011: The Federal Budget has confirmed that the Government will be reducing the corporate income tax rate to 29%, allowing the immediate write off of assets costing up to $5,000 and providing a $5,000 deduction for the purchase of a company vehicle for qualifying SMEs.
Deloitte Private Tax partner David Pring, believes these measures are positive for SMEs but expressed concern that the measures would not come into effect until 1 July 2012.
“Small businesses have again been told to wait for these benefits. Simply put, SME owners will defer purchasing vehicles until post July 2012 to take advantage of these initiatives,” said Mr Pring.
David Pring believes that the SME measures announced in the Henry Review last year such as simplification for small business Capital Gains Tax, tax losses and simplification for trusts will likely be reviewed in October as part of the Government’s proposed tax reform.
It is clear SMEs will need to wait for the Government’s tax summit in October for further tax reforms,” said Mr Pring.
The Government also announced measures to increase tax revenue such as the removal of the spouse rebate for under 40s, removal of the low income tax offset for minors and a change in the FBT rate for motor vehicle related expenditure to a single rate of 20%.
“These measures are expected to increase tax revenue by $2.4 billion over the next 4 years,” added Mr Pring.