While welcoming the small business tax cuts and asset write-off initiative introduced in the 2015 federal budget, IPA chief executive officer Andrew Conway said more needs to be done.
“Wide ranging and more substantial tax incentives and relief must be offered to entrepreneurs and innovators in Australia to encourage growth, productivity and employment,” he said.
Mr Conway’s comments come after the IPA last week released the Australian Small business White Paper in which the institute made a number of recommendations that it says will boost small business.
Included in these, said Mr Conway, is a further cut to the small business tax rate.
“We could learn from Alberta, Canada, which has a combined federal/provincial corporate income tax rate of just 14 per cent for small business compared to 25 per cent for general business,” Mr Conway said.
“The small business capital gains tax concessions should also be reviewed and redirected from the end point of the business life cycle towards the start-up and growth phase.
“Further, fringe benefits tax legislation needs a total shake-up to help reduce the excessive compliance burden on small business, and to alleviate the inequitable application of the top marginal tax rate to all fringe benefits," he said.
“This could be achieved in large by Australia moving to tax fringe benefits in the hands of employees, as occurs in many overseas jurisdictions."
The white paper also makes recommendations on small business tax policy, such as the Division 7A rules, the reinstatement of the loss carry-back initiative, a single legal structure for small business, treatment of trusts, safe harbour practices, personal concessional super contributions and ways to reduce the superannuation compliance burden.