In a joint release issued today, Prime Minister Scott Morrison and Treasurer Josh Frydenburg have announced that they will introduce legislation to bring forward the already legislated tax cuts for businesses under $50 million when Parliament resumes next week.
The new timetable will see those companies facing a tax rate of 26 per cent by 2020–21 before finally dropping down to 25 per cent in 2021–22.
At present, the rates are scheduled to drop to 25 per cent by 2026–27.
Speaking to Accountants Daily, TaxBanter senior tax trainer Robyn Jacobson said that while the announcement was welcome news to small businesses, the introduction of yet another piece of legislation around corporate tax cuts would create further uncertainty.
“As far as small business is concerned, it is a positive move and it is going to be good for them to get that tax relief down to 25 per cent sooner rather than later,” said Ms Jacobson.
“We can see what the government is trying to achieve but we’ve also got a situation where, after two years of uncertainty regarding the corporate tax cuts, we finally got certainty on 31 August when the base rate entities bill got enacted, and within a fortnight it looks like we’re going to have an amending bill so it now creates another round of uncertainty particularly heading into a federal election next year as to whether this will be enacted, when it will be enacted, and whether it will be enacted in the form that has been proposed by the Treasurer today.”
The Tax Institute’s senior tax counsel, Professor Robert Deutsch had earlier expressed concern over the constant tinkering with the corporate tax rate, arguing that it would create uncertainty for accountants and their clients in the short term.
“The uncertainty comes with trying to bring it through the Senate and we don’t know if they will be accommodative or as difficult as it was with the general corporate tax cut issue before, and if it is, then it will create a very unsatisfactory tax environment between now and the next federal election,” said Professor Deutsch.
“It will also have an impact on franking credits because every time you change the date or the rate, it does have an effect on the company’s franking credits and that’s an ongoing issue that remains unresolved that every time you tinker with it, it adds a layer of complexity.”
Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.