Almost 93% of small to medium sized Australian businesses say the cost of taxes and insurance is holding them back, according to research published this week by accounting firm Bentleys.
The Voice of Australian Businesses survey, which canvassed 378 SME businesses, found most believe they are missing out on economic benefits under the current tax system.
Ninety per cent of the SMEs surveyed said Australia’s complex tax system is an inhibiting factor in their business, while 87% cited excessive red tape as being inhibitive.
While 56% said the federal government’s $20,000 asset write-off scheme, included in the 2015 budget, was beneficial, the majority of businesses surveyed (51%) said they did not intend to make use of the tax break.
Nearly half of businesses surveyed (43%) said a reduction in the company tax rate would help in the running of their business, while cuts to red tape (42%) would also assist businesses.
Bentleys Sydney director Kevin Cranfield said what Australia’s small businesses really need “is a less restrictive regulation that allows for long-term innovation”.
He said the findings show Prime Minister Malcolm Turnbull has his work cut out for him when it comes to tax reform plans, with SMEs concerned about missing out on long-term benefits to the economy.
“There needs to be a far more consultative approach to tax, or any reform that impacts SMEs,” he said.
Cranfield said Bentleys was calling on the government, especially Turnbull’s new economic team, to do more when it comes to tax reform and easing some of the “consistent pain points of the tax system”.
“With the instalment of Kelly O’Dwyer as both minister for small business and assistant treasurer, there is an opportunity to develop tax reform with SMEs front of mind,” he said.
“It’s no longer enough to speculate on red tape reduction, with 90-plus per cent of businesses in Australia being SMEs, we need action, and Ms O’Dwyer is well placed to deliver it.”
Colin Chirgwin, director of taxation at Bentleys, told SmartCompany this morning the survey findings highlight there are “too many levels of government impost” on SMEs.
“There needs to be some streamlining of all that an emphasis on corporate tax collection,” he says.
Chirgwin says there is “clearly a groundswell to reduce the corporate tax rate, and to my mind that is a good thing”.
“It frees up money for employers to go and employ more people.”
Chirgwin says the finding that the majority of small businesses are not taking advantage of the federal government’s asset write-off break is not surprising.
“My view is that things like this write-off are great for those which spend money, but for me it’s tinkering,” he says.
“It’s not a structural reform; it’s a lolly in the lolly shop.”