Business groups react to Coalition’s decision to cut $5 billion in tax breaks

Business and tax groups have expressed frustration over the Coalition’s decision to scrap the loss carry back and asset write-off schemes should it win government.

Opposition treasury spokesman Joe Hockey announced the cuts yesterday, among others, which will provide the Coalition with savings as high as $35 billion.

But tax groups are disappointed.

Peter Strong, executive director of the Council of Small Business of Australia, told SmartCompany this morning the decision to scrap the benefits will leave a lot of business owners confused.

“We were told a while ago that if the mining tax is withdrawn then this compensation would be affected. But for us, it’s just the confusion that worries us.”

“If I’ve been planning to take advantage of the instant tax write off, and it goes away, then what happens?”

Strong says business planning depends on knowing when and how these benefits will be introduced. If they’re scrapped, he says, businesses are left in the lurch.

“The confusion is not going to help. I was hoping that as we go through this process, we’d keep the higher instant asset tax write-off in place.”

The Government’s plan raised the write-off threshold from $5,000 to $6,500.

Deepti Paton, tax counsel at the Tax Institute, said scrapping the two initiatives would be a “disappointing blow”.

“We urge the Coalition to clarify that the Government’s proposed cap on self-education expenses will be scrapped under a Coalition government.”

“The proposed cap is a blunt instrument which will unfairly penalise Australians seeking to improve their qualifications for work or business via legitimate and reasonable self-education expenses.”

The cuts will also affect the Government’s accelerated depreciation on motor vehicles, and the phase-down of interest withholding tax.

At yesterday’s debate between Joe Hockey and Treasurer Chris Bowen, Hockey said the Coalition did not need to make any more cuts beyond those he had already announced. However, he also refused to name a date for returning the budget to surplus.

Among other cuts in the Coalition’s plan are scrapping the school kids bonus to save $4 billion, discontinuing the low income super contribution plan to save $2.9 billion, and scrapping the Clean Energy Finance Corporation to save $1.6 billion.