SME tax burden could be reduced in this year’s budget as senior Coalition senator talks up company tax cuts

A senior member of the federal government has talked up the possibility of company tax cuts being included in the upcoming budget as Prime Minister Malcolm Turnbull’s approval rating falls into negative territory for the first time.

Turnbull’s approval rating has plummeted in recent months, according to Newspoll, however, he remains the preferred prime minister in comparison to Opposition Leader Bill Shorten.

Over the weekend, Liberal Senator Arthur Sinodinos talked up the benefits of company tax cuts.

However, Treasuer Scott Morrison has previously flagged any cuts to company tax in this year’s budget will be moderate, given changes to the goods and services tax are now off the table.

Speaking on the ABC’s Insiders program on Sunday, Sinodinos labelled economic reform as “priority number one”, despite the government spending a large amount of time and energy on Senate voting reform last week.

The cabinet secretary said the upcoming budget will be about promoting greater participation in the workforce and hinted at possible cuts to the company tax rate, which currently sits at 30% for most business.

“Putting money in the hands of consumers obviously encourages more spending and disposable income and has good incentive effects,” Sinodinos said.

“But cutting company tax also has good effects. It can encourage investment, it can encourage higher productivity – it can encourage more investment from overseas. There are lots of studies that show that ultimately leads to higher GDP in the economy and higher wages for workers.”

During the interview, Sinodinos also confirmed the “debt levy” imposed on high-income earners during the 2014 budget will come to an end in 2017.

Small business would like minor tweaks to last year’s 1.5% tax cut

Peter Strong, chief executive of the Council of Small Business of Australia, told SmartCompany he understands the government is open to tweaking the 1.5% small business tax cut announced in last year’s budget.

While the move was welcomed by the small business community at the time, the tax cut only applies to incorporated businesses with less than $2 million in annual turnover.

However, many small businesses are unincorporated.

Because of this, Strong would like to see this condition removed and the $2 million threshold lifted so fast-growing companies that employ more people are able to access the tax cut.

“There certainly needs to be some changes in tax, but we had some pretty good changes in the last year,” Strong says.

“The conversations we’ve had [with the Government] have been productive. They are open to changes there, but they’re looking at the impact on the budget for any changes that go above $2 million. They’re open to it, but they’ve also got a budget to manage.”

Last week, SmartCompany revealed Labor is still willing to work with the government to implement a 5% small business tax cut.