The Government is under pressure to raise the $2 million threshold for small business to $5 million, in a compromise deal that would see tens of thousands of SMEs receive the July 1 cut in the company tax rate.
This comes after several business leaders and executives slammed the Greens for saying they would allow tax cuts for small businesses to pass the Senate, but would still block a similar move for any business with revenue over $2 million a year.
However, the Greens have expressed their support for raising the small business threshold to $5 million in annual revenue. The move has the support of the Henry Tax Review and tax experts.
Right now, only businesses with revenue under $2 million will receive a cut in the corporate tax rate from 30% to 29% in July. The Greens want that raised to $5 million, providing 40,000 extra businesses with some relief.
Business leaders and groups have slammed the Greens for their refusal to pass tax cuts for large businesses, saying there should only be one corporate tax rate.
“It makes no sense at all to have a different rate for large and small companies,” NAB chairman Michael Chaney told the Australian Financial Review this morning.
“Apart from the rorts such a system is likely to give rise to, large companies have just as much need to be competitive as smaller ones.”
Australian Industry Group chief Heather Ridout also said the reform is a priority, while Tax Institute counsel Robert Jeremenko said the $2 million threshold was too low.
That echoes comments from CPA Australia, which told SmartCompany yesterday raising the threshold deserves consideration.
The pressure on the Government comes as the Liberal Party is also opposing the tax cut, saying it will refuse any plan funded by the mining tax.
In a statement yesterday, opposition small business minister Bruce Billson said the tax cut wouldn’t help many businesses.
“Only one-third of small businesses are structured as companies and fewer still are profitable that might get some assistance from a modest company tax cut,” he said.
Opposition leader Tony Abbott says the Coalition will introduce tax cuts without using a mining tax to fund the cuts.