Consider SME stress points in tax decisions, urges IPA

The tax system should provide targeted assistance towards stress points in a business life cycle, according to the Institute of Public Accountants (IPA).

IPA chief executive Andrew Conway said it’s just one recommendation stemming from its recent Australian Small Business White Paper.

He added that small business can do it tough at every stage of the business life cycle, including during the start-up phase or during a temporary setback.

“Most tax concessions (excluding the small business capital gains tax and refundable R&D concessions) are merely timing benefits that bring forward tax deductions to reduce the amount of tax payable, which is only useful if the business is in a tax paying position,” Mr Conway said.

“If a small business is at the start-up stage or experiencing a temporary downturn, the bringing forward of deductions may not provide essential cash flow benefits other than more carried-forward losses.

Mr Conway said he will continue to advocate for the loss-carry-back initiative, something he noted had a short life but proved beneficial.

“Loss carry-back for corporate entities is one way the tax system can assist taxpayers to deal with a temporary setback,” he said.

“Non-corporate entities, while problematic, may also require similar relief to assist with the survival of viable businesses.”

The IPA also highlighted the increased amount of regulations impairing the ability of SME owners to focus on business growth.

It found an increasing number of small business owners concerned about the way regulators do not appear to consider the impact of new regulations on business owners’ ability to build their businesses.

“The federal government has been attempting to consolidate regulatory bodies to achieve efficiencies and reduce the cost of regulation. This process has impacted accounting and audit standard-setting,” the paper said.