среда, 29 февраля 2012 г.

Fed: New tax system for small business proposed


AAP General News (Australia)
04-30-2008
Fed: New tax system for small business proposed

By Colin Brinsden

CANBERRA, April 30 AAP - Two of the country's top tax advisers, Deloitte and the Institute
of Chartered Accountants, have joined forces to develop a new and less burdensome way
of taxing small businesses.

They say their entity flow-through (EFT) taxing method will be far simpler for small
companies earning profits of below $550,000 per annum, relieving them of a raft of complex
compliance rules.

Similar taxation methods operate in the US, UK and New Zealand.

"Complaints you hear from small business is that the complexity and the compliance
burden is disproportionate with the size of the business they run," tax counsel at the
institute Ali Noroozi told a media briefing in Canberra.

He said their proposal was timely as the government has announced a "branch and root"

review of the tax system.

"This could be seen as a radical proposal, but at the same time very reasonable because
it's largely revenue neutral," he said.

"What it tries to do is avoid a whole lot of sections and regimes within the tax system
to which as soon as you become a company ... you are exposed to or have to abide by."

Simply, under the EFT system, the company's taxable income would be treated as being
derived by its owners in equal proportions, rather than the company being taxed as a separate
entity.

The EFT would initially be aimed at companies with a $550,000 annual profit with five
or fewer shareholders or owners.

The owners would be taxed at the marginal tax rate, rather than the company tax rate
of 30 per cent.

Once the company becomes bigger, it can opt back into the current taxation rules.

"At the time you get to $550,000 total profit for a company with five shareholders
you get a rough average rate of tax of 30 per cent," Deloitte's national tax technical
partner Alexis Kokkinos said.

"Obviously, when you go above that figure then your average rate of tax goes higher than that."

"The $550,000 level would most likely cover a majority of SMEs (small and medium enterprises)
which are currently under the Simplified Tax System that applies to SMEs."

He said while the previous Howard government had attempted to ease the tax burden through
the Simplified Tax System, it was widely acknowledged that its benefits were quite limited
in practice.

The proposal has already been presented to Assistant Treasurer Chris Bowen and Minister
for Small Business Craig Emerson, and was the subject of a round table discussion with
Treasury and the Australian Tax Office today.

AAP cb/sb/jl/bwl

KEYWORD: TAX

2008 AAP Information Services Pty Limited (AAP) or its Licensors.

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