There are around 100 tax changes that the former Labour Government and new Coalition Government have announced that are still to be clarified with final legislation. The uncertainty has arisen due to the Coalition stating it will review or repeal Labour measures. Some include the proposed “loss carry-back measure”, delay the compulsory super guarantee increases annually to stay on hold at 9.25% for at least a year, 28.5% Corporate tax rate for Over $5mill turnover, removal of instant write-off of assets under $6,500 and tax deductions on interest for overseas business expansion. There is a tendency for tax advisors to advise caution which is adding to indecision while the business community waits for certainty.
As Yolanda Redup reports at Smart Company –
Small business owners have been left in limbo, with almost 100 tax changes announced by the Coalition and former Labour government left unlegislated.
Cash flow problems are common among small business and the raft of changes which are yet to be enacted are making it difficult for them to plan for the future.
EY, Ernest Young Accounting, has compiled a list of the unlegislated changes for its clients to help manage the confusion, with the global accounting firm identifying a total of 95 potential changes.
EY tax partner Alf Capito told SmartCompany the uncertainty hasn’t ground business to a halt, but it is reducing investment and spending.
“The economy is still jigging along, but when you have close to 100 measures unlegislated, each one impacts a small proportion of the tax paying community, potentially in a significant way,” he says.
“If you’re looking to buy an asset, but don’t know if you’ll get the instant tax write off or not, you wait to buy it until it becomes clear. So it’s hampering investment and potentially creating a position where jobs aren’t being created.”
Capito says measures such as the Carbon Tax and the Minerals Resources Rent Tax repeal can have a big impact upon the business environment, but largely it’s the “plethora” of un-enacted measures which is destructive.
“Each measure in itself isn’t critical… but it’s just the plethora of measures which demonstrate the Labour government let this get out of control,” he says.
“I sense the new government is determined to deal with these issues, but the difficulty will be finding the resources to get these issues resolved when it’s taking a tough line on public service cuts.”
Need help? Not sure? Call for FREE 30min advice / Strategy session today!
Call 0407 361 596 Aust and also get Free “Avoid these GST mistakes” – there’s 18 that the Tax Office see regularly – get them right! Email firstname.lastname@example.org or call 0407 361 596 Australia