Close to half a million SMEs will benefit from changes to thresholds for pay-as-you-go tax instalments (PAYG) as part of the federal government’s commitment to slashing red tape.
Yesterday marked the Coalition’s Autumn Repeal Day – one of the government’s biannual days dedicated to saving the economy more than $2.45 billion by reducing compliance costs.
The Department of Treasury published its Annual Report on Deregulation yesterday, which said measures announced and adopted by the Treasury portfolio resulted in a net reduction in regulation of more than $570 million in 2014.
While some of the savings outlined in the report, including the government’s proposed Freedom of Financial Advice reforms that were slated to save $198 million last year, failed to pass through Parliament, there are a range of measures designed specifically to reduce the compliance burden on SMEs.
Changes to PAYG thresholds were first flagged by Small Business Minister Bruce Billson in June last year, but the annual report reveals more SMEs are set to benefit from the changes than first expected.
An estimated 447,000 SMEs are expected to benefit from the changes, up from estimates of 362,500 small businesses. Overall the changes are expected to reduce compliance costs by $67.3 million, up from $56 million.
Of that group of SMEs, 45,000 companies that have no GST reporting requirements will no longer have to lodge business activity statements, where to date, lodgements have been made only to report PAYG instalments.
For the 402,000 SMEs with modest or negative incomes that are filing BAS, they will now be able to take lodging PAYG instalments off their check lists.
Other reforms expected to help small businesses include a $20 million reduction in the red tape surrounding how superannuation contributions are made. The government will expand access to the Small Business Superannuation Clearing House as well as removing an obligation on business to offer employees choice when it comes to superannuation in circumstances where it does not make sense to do so, such as employing temporary residents.
In a statement, Small Business Minister Bruce Billson said the updated Franchising Code of Conduct, which came into effect on January 1, will reduce the regulatory burden on the franchising sector by $8.6 million per year.
Billson said the government will also be considering ways to reduce compliance costs for SMEs through its broader review of the tax system.
“Our government knows red tape and unnecessary compliance burden clog up the ability for the hard working women and men of small business to get their jobs done,” Billson said.
“Complying with tax regulation costs small businesses around $18.7 billion annually – almost half of the total tax compliance costs of $40 billion. As the engine room of our economy, it is important we get the settings right for small business.”
Peter Strong, executive director of the Council of Small Business of Australia, told SmartCompany COSBOA “absolutely” continues to support the government’s mission to reduce red tape.
And while he says some people have been critical of the government’s inability to secure passage of some savings through the Parliament, Strong says red tape is not something government can “withdraw overnight”.
“They are doing it twice a year and that’s a great outcome,” Strong says.
“If it continues on it will become part of the culture of the public service to keep looking at what they can get rid of.”
Importantly, the biannual red tape repeal days give SMEs confidence, Strong says.