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Australian tax news: Universal Definition and Separate Entity for Small Business

22 May 2012   (0 Comments)
Posted by: SAIT Technical
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The Tax Institute Australia (03 May 2012)

The Tax Institute and the Council of Small Business of Australia have called on the Federal Government to closely consider the merits of establishing both a universal definition of small business and a separate small business entity.

These issues were discussed in detail at the inaugural Small Business Roundtable, a joint initiative of The Tax Institute and the Council of Small Business of Australia, held this week in Sydney.

Robert Jeremenko, Senior Tax Counsel at The Tax Institute said the Federal Government must take a closer look in order to understand the most pressing needs faced by small businesses in Australia.

"For too long small businesses have been hamstrung by a multitude of thresholds and definitions which has hampered growth due to excessive regulation and red tape” said Mr Jeremenko.

"The Federal Government should take the lead on this issue and properly consider the merits of establishing a separate small business entity as well as a universal definition of what constitutes a small business.

According to Mr Jeremenko: "A separate small business entity structure would blend the advantages of existing company, trust, partnership and sole trader structures in order to provide an easy, cost-effective, default entity to start a small business.  Such a concept deserves further analysis as it could present a viable alternative to existing business structures in terms of asset protection, limited liability and flow-through tax treatment.

"Real reform can only take place if leadership on these issues includes the States and Territories through the Council of Australian Governments process.

"Many of the compliance issues being faced by small business are caused by different policy priorities within both Federal and State Governments.”

Among those present to discuss a broad range of challenges affecting Australia’s small businesses were the Assistant Treasurer, the Hon David Bradbury MP; the Shadow Minister for Small Business, The Hon Bruce Billson MP; the Federal Member for Lyne, Rob Oakeshott MP; and a range of small business leaders, economists, tax professionals and government representatives.

Peter Strong, Executive Director, COSBOA, said "While a universal definition is critical, it must take into account the policy considerations that underpin various concessions afforded to small businesses as they vary in size, demographic, growth rate and their stage in the business life-cycle.

"We need to better examine the building blocks of any definition to ensure it best enables small businesses, the engine of our economy, to grow and thrive,” he said.


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