Thousands of small businesses will get access to tax breaks and red tape cuts under a $112 million plan to be outlined in next week’s federal budget.
As part of the package the Morrison government will increase the small business entity turnover threshold from $10 million to $50 million for 10 different tax concessions.
Among the concessions will be not applying the 47 per cent fringe benefits tax on small businesses that provide free car parking to their staff in a non-commercial car park or work phones, laptops and other similar devices.
The government will also remove the 47 per cent FBT on retraining provided by employers to redundant, or soon to be redundant, workers.
In another measure, brewers and distillers will be able to pay and report excise monthly rather than weekly, helping with their cash flow.
And the government will reduce the time for tax returns to be amended from four years to two years, so businesses have more peace of mind about the tax office amending their return.
The FBT change relating to training will start on Friday.
The other FBT changes are due to start on April 1 next year, with the remaining concessions starting from July 1.
Treasurer Josh Frydenberg said the changes would complement other measures already in place, including lowering the company tax rate, increasing the instant asset write-off and providing a 50 per cent accelerated depreciation allowance.
“We know that the pathway to recovery is not through higher taxes but through a more competitive and efficient tax system that supports jobs and promotes investment,” Mr Frydenberg said.
“Enabling small businesses to keep more of what they earn means they can keep operating, pay their bills and retain or hire more staff.”
Greg Travers, director of tax services with William Buck, said it was important the government also embarked on long-term improvements to the tax system.
He says Division 7A – a section of tax law that contains anti-avoidance provisions – needs urgent attention.
“More businesses than ever will have borrowed money this year just to stay afloat. I expect there’s been loans going around everywhere and having such a complex system to deal with loans to and from companies makes it really difficult for business owners,” Mr Travers said.
The government is expected to make further announcements about business deregulation on Friday.
PwC Australia chief executive Tom Seymour said it was vital the government turned its focus to cutting regulation.
“Where the pendulum swings too far towards managing down every possible risk, this creates increasing regulatory burdens for business, stifles innovation and therefore affects creation of jobs,” he said.
“We can grow our way out of this crisis, and ensuring we have the right regulations in place is a critical step.”