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Is the tax system stunting your business growth?

With business being the lifeblood of the Australian economy, as a business owner it seems to me that there are still some very obvious impediments to growth embedded in the tax system

  • Definition of Small Business  Unless you are a small business, you can’t access any of the quite lucrative small business concessions (including those relating to income tax, CGT, GST, and FBT). To be a small business, however, your turnover must be less than $2 million. Despite being introduced more than 7 years ago, this threshold has never been raised or even indexed. If you grow and exceed this threshold, you lose access to these concessions.
  • Payroll Tax Perhaps the greatest tax barrier at a state level to expanding your business is payroll tax. It not only inhibits growth but can be an administrative nightmare. Governments have the power to tax many other things, so why would you choose to have a tax on employing people?
  • Restructures  In the early stages of business life, to keep things simple and low cost many start-up businesses commence with a sole trader or partnership structure. However, as a business grows, such structures become less appropriate on several levels, including asset protection, tax-effectiveness and succession planning. However, changing to a more effective structure such as a trust or company can often result in significant CGT liabilities.

So, there are three obvious impediments to growth embedded in the tax system that I can think of. What are some others?

Category
ABN
Published
17 Jul 2014
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