SMEs warned they could be hit by government’s paid parental leave scheme

Small and medium-size businesses may have to cough up for the government’s paid parental leave scheme if the government targets businesses with taxable incomes of more than $5 million. 

Finlaysons tax and family business partner Andrea Melillo told SmartCompany the government’s claim “the big end of town” will fund the PPL policy is untrue if that sector includes the more than 80,000 SMEs that employ between 20 and 199 employees.

“There are a lot of businesses that are making $5 million a year taxable income that consider themselves to be SME businesses,” she says.

Melillo says confusion has arisen because the details of the scheme are yet to be published by the government.

“Nothing came out in the budget, it is quite hidden for something that is supposed to be a signature piece for the Abbott government,” she says.

Melillo says many businesses are expecting to get the benefit of the announced 1.5% company tax cut, taking their rate down to 28.5%, but those businesses with more than $5 million taxable income will actually end up back at 30%.

“I think $5 million is too low a threshold,” she says.

“If [the government is] talking about the big end of town that’s $20 million to $50 million plus in turnover.”  

Melillo says more details about the PPL scheme need to be released urgently to prevent a slide in business confidence within the SME sector.

Diversity strategy and compliance consultant Prue Gilbert told SmartCompany she is concerned to see so many people coming out against a policy that can really benefit women. 

“Is [Melillo] saying SMEs ought to be able to discriminate against women?” Gilbert says.

“What she is saying is SMEs want the benefit without having to pay for it.”

Gilbert acknowledges “the devil is in the detail” as to who the PPL scheme will impact. 

“The scheme does operate as a levy whereas at the moment paid parental leave is tax deductible as it is an expense,” Gilbert says.

“That’s why when we talk about the cost of this scheme out of the government’s pocket it is going to be far cheaper than we think.”