Media Release: Missing the Small Business Target

Mr Pizzacalla said that historically, tax initiatives in the SME sector had been ad-hoc and reactive in nature and whilst the standardisation of the eligibility criteria for small business tax concessions had been a small step in the right direction, a move towards a truly simplified system was now overdue.
 

 “There is a raft of anomalies in the guidelines for Australia’s SME tax concessions,” said Mr Pizzacalla. “More needs to be done to make the SME concessions simpler to understand and less costly to access. This is a crucial step in the tax reform process, especially given the importance of the SME sector to the Australian economy.”
 

He said that economic policy must also take into account the impact on SMEs and that SME specific policies must be developed in a co-ordinated and logical manner.
 

 “The emphasis should be on moving towards the development of appropriate medium to longer term SME tax policy,” he said.
 

Speaking in Wellington, Mr Pizzacalla highlighted a number of ways this could be achieved including lowering the overall tax burden for SMEs, having a more focused approach to the development of appropriate SME tax strategies - rather than the heavy emphasis on tax compliance, increasing investment tax incentives and initiatives for SMEs, encouraging the retention of taxable profits, increasing management and employee tax participation incentives, allowing small businesses access to a higher R & D concession rate, and increasing simplicity in the tax law.
 

“In the medium to longer term, we would also like to see agreed-upon definitions not only around the term SME, but also its various sub-sets (e.g. micro-business, entrepreneur etc) and tax policy set accordingly,” said Mr Pizzacalla.
 

In particular, he highlighted three key policy recommendations: