Business groups, including the Australian Chamber of Commerce and Industry and the Business Council of Australia have welcomed the government’s commitment to fast-track tax cuts for businesses with a turnover up to $50 million.
At present, the tax rate for companies with annual turnovers capped at $50 million has been lowered from 30 per cent to 27.5 per cent. It is scheduled to drop to 25 per cent by 2026-27.
On Thursday, Prime Minister Scott Morrison confirmed the tax cuts would be brought forward by five years.
Under the fast-track plan, the rate will fall to 26 per cent in 2020-21 and 25 per cent in 2021-22. Small and medium businesses that are unincorporated are entitled to a tax discount that is scheduled to reach 16 per cent by 2026-27. That, too, will be brought forward to 2021-22.
Business Council of Australia’s chief executive Jennifer Westacott said today fast-tracking tax cuts for small and medium businesses earlier will boost business confidence and help grow the economy.
“The Government’s plan to lower the tax rate five years earlier than planned for small and medium businesses will help boost the economic activity between small, medium and big business, which is worth about $500 billion a year to the economy,” Westacott said.
“The relationship between big and small business is fundamental to driving the economy, and making one half of that equation stronger will help drive the growth Australians need to create jobs and build higher living standards,” she added.
While the cost of fast-tracking the tax cuts is estimated to be $3.2 billion over four years, this will be reduced to less than $2 billion by junking company tax cuts for bigger businesses, according to the Australian Financial Review.
Labor indicated on Thursday that if the revenue was there to pay for fast-tracking the tax cuts, then it would support them.
“We will keep an open mind on this question as we examine the numbers, but the other criteria we have is that our first priority is to properly fund our schools, to properly fund our hospitals,” Labor leader Bill Shorten said on Thursday.