Joe Hockey to cut tax for small business

Treasurer Joe Hockey (pictured) is set to deliver small business a tax cut of at least 1.5 per cent in tonight’s federal budget.

As the ABC reports, the cut will apply only to businesses with a turnover of less than $2 million. It will therefore create a two-tier system in which bigger companies still pay 30 cents in the dollar in tax.

Kate Carnell, CEO of the ACCI, welcomed the change.

“With more than seven in 10 Australian small businesses unincorporated, it was concerning that they would miss out on the benefit of the 1.5 percentage point cut in company tax for businesses with a turnover of less than $2 million,” Carnell said in a statement.

“It is encouraging that the government is looking after those 1.7 million unincorporated small businesses, including tradies, sole operators and partnerships, with other support. Making it easier for small businesses to claim tax deductions for their expenses will make it easier for small businesses to invest.

However, according to Shane Crockett, the director of tax services at William Buck, more needs to be done to help small businesses. He told the AFR that the cut-off point of $2 million is too low and also claimed the tax system is too complex.

"The problem with the small business regime is that it is cobbled together and extremely complex," Crockett said.

"At the moment the concessions are very complex and difficult to get into.”