Improvements to the way small businesses are taxed are on the horizon, says federal Treasurer Joe Hockey.
Speaking at the National Small Business Summit in Sydney this morning, Hockey said one of his key priorities is creating a level playing field between local companies and large multinationals.
“Our tax system was designed for the 1950s economy, not the 2050s economy,” Hockey said at the breakfast event.
“So, of course, without tax reform, small business will not have the opportunity that it needs. Our tax system wasn’t designed to deal with multinational trade, increasing global competition for investment, the internet or the digital economy.”
“We can fix it. We actually have to fix it – it can’t be a patch-up job,” he added.
Hockey was quick to outline the government’s recent policy achievements, including the small business tax cut and $20,000 instant asset write-off scheme.
“Business registration has been streamlined,” he said.
“Obstacles to crowdsourced equity funding have been removed. And new startups can immediately deduct the costs of setting up their business.”
“And you know what these initiatives come from? The efforts of small business minister siting in cabinet… but also having him in the treasury portfolio.”
However, the treasurer also pledged that recent policies aimed at energising small business are “the beginning of the story, not the end”.
In particular, Hockey said small businesses can expect to see anomalies to the application of the goods and services tax removed in favour of a fairer system for local booksellers and other retailers.
“Our application of the GST to imported digital products is potentially going to go further following discussions with the state treasurers in mid-August,” he said.
“We’ve now found a way to ensure that those providing goods from overseas into Australia do not get any advantage out of the tax-free threshold and this is hugely important to small business.”
“How do I say to a bookseller in Lane Cove that they have obligations to pay tax but Amazon, selling the same book overseas, doesn’t? It’s unsustainable, it’s been hard to plug, but it has to come to an end.”
The $1000 GST free threshold for online purchases from overseas retailers has long been a thorn in the side of local SMEs. However, the states have previously been unable to agree on how to move forward.