IPA applauds Board of Taxation’s review of SB tax concessions
The Institute of Public Accountants (IPA) has applauded the Board of Taxation for its holistic review of small business tax concessions.
The government finally released the Board of Taxation’s review of small business tax concessions in December, after it was completed and delivered to the Treasurer in March last year.
The IPA has commended the Board of Taxation, having long advocated for simplifying the tax concessions regime for small businesses to ensure greater simplicity and efficiency.
IPA general manager of technical policy Tony Greco said that tax concessions can be better utilised by addressing challenges that face small businesses, particularly with fundamental changes to traditional ways of doing business.
“This holistic review introduced the important concept of concessions helping small businesses at all stages of their business life cycle, from crucial inception and survival stages through to maturity and retirement phases,” said Mr Greco.
“This life cycle approach allows for better targeted assistance to meet real world commercial issues facing small businesses at every step of the way.”
The Board of Taxation’s headline recommendation is the removal of the multiple small business definitions in tax, and the application of the $10 million threshold uniformly across all small business tax concessions.
“The retention of the $10 million small business threshold definition and the alignment of all small business tax concessions to this definition is a positive step towards removing the complexities of the current system,” said Mr Greco.
He noted that the IPA is also very pleased to see the adoption of its signature policy recommendation of improving the unincorporated small business tax discount by increasing the cap to what will be a more meaningful incentive.
“The small business capital gains tax (CGT) concessions will be simpler, fairer and more sustainable by increasing the turnover threshold to $10 million (currently $2 million); repealing the net asset test; and collapsing three exemptions into a single capped exemption,” said Mr Greco.
“The capping of the small business CGT concessions will make this important tax concession more sustainable as the cost is significant and continues to grow. This will go a long way in addressing the issue of a large proportion of the benefits being accessed by a relatively small number of businesses.”