Clock ticking on company tax cut for small business as Greens threaten to block mining tax legislation

The Greens have attempted to force the Government into putting its planned company tax cuts into legislation by threatening to block its mining tax program in the Senate.

As part of its mining tax package, the Government has promised to cut the company tax rate from 30% to 29% for businesses with less than $2 million turnover from the 2012-13 tax year, which starts on July 1. The cut will be passed on to other businesses from 2013-14.

But tax experts have also expressed their concern that the company tax cut legislation and the mining tax will take too long to get through Parliament, with only two sitting weeks left until the May budget.

“I think the timing is going to be quite a challenge in relation to both of these law changes,” Institute of Chartered Accountants tax counsel Yasser El-Ansary told SmartCompany this morning.

“The mining tax is going to be critically important for the next few years…whether the start date is realistic is going to be the question most people will be asking over the next few weeks.”

Greens leader Bob Brown has said the Government has “only itself to blame” if the mining tax is blocked, saying small business should be given more acknowledgement in the debate.

The catalyst for the comments was the fact the Government hasn’t included the legislation for company tax cuts in the mining tax legislation already passed by the Senate.

Although the Government introduced both these measures after the Henry Tax Review, they are being treated separately – the Greens want to see all the changes at the same time.

“Where is the Government’s promised tax cut for small business (from 30% to 29%) due to start in July? It is reasonable to want to see legislation for the small business tax cut before handling the rest of the package,” Brown said in Hobart yesterday.

“Better still, the Greens are wanting government to seriously consider such Henry Tax Review recommendations as lifting the definition of small business from $2 million to $5 million income, or lifting the instant tax write-off for new equipment from $6500 to $10,000. Some red tape could be cut as well.”

The debate over the mining tax becomes even more urgent in light of the Government’s dwindling revenues, as all eyes are on whether Treasurer Wayne Swan can deliver a surplus.

However, Swan told the Australian Financial Review yesterday the Government is still focused on delivering the general company tax cut.

But problems continue to cloud the debate over the mining tax, specifically a new dispute about scrapping tax benefits to help small business.

Although the Greens don’t support a tax cut for larger businesses, the party wants to see all the relevant legislation on the table before it’s passed.

El-Ansary says this is a reasonable request.

“That’s not unreasonable for the Greens to want to see the entire package of reforms in one sitting period rather than dealing with them on an individual basis.”

In an ideal world, he says, this would have all been dealt with months ago.

“We would have finalised this in the middle of March and that would have left plenty of time for companies to introduce new systems, new processes and other changes they need to make to comply with their obligations.”

“This is a completely new regime, it’s untested, and the principles of the debate need to be defined.”


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