Regulatory Roundup – December 2012
Change in GST laws to reduce compliance costs for small businesses
A potential change in laws regarding the goods and services (GST) instalment system will enable small businesses in a net refund position to use the system if they wish. The change, initially conceived in the 2011-12 Budget, is expected to reduce the compliance costs for many small businesses that will no longer have to revert to quarterly reporting. If the legislation is passed, small businesses that already use the GST instalment system may be allowed to continue using it if they move into a net refund position. Unfortunately, small businesses that are currently not using the instalment option but are in a net refund position will remain unable to account for GST by instalments.
Help is available for tax debts in times of “serious hardship”
If you are having trouble paying any tax debt owed to the ATO due to serious financial difficulties, there are options available. This can include an arrangement to pay by instalments or cancelling any interest charges on the money owed. But in some cases, an individual may even be released from paying the debt if doing so will cause “serious hardship”. The ATO defines “serious hardship” as when as individual would be left unable to provide food, accommodation, clothing, medical treatment, education and other necessities for themselves, their family, or other people they would normally be responsible for.
R&D incentive stays, but no company tax cut
The Research and Development (R&D) tax incentive has not been scrapped to fund a reduction in the company tax rate, but the Business Tax Working Group – who was tasked with finding a revenue-neutral way to fund the cut – was unable to find a way to facilitate the company tax rate cut without any loss to overall government revenue. The group concluded that Australia should still have the ambition to reduce its company tax rate but that this should be considered against other budget priorities and the overall mix of business taxes.
The ATO is said to “have a heart” when it comes to small businesses
Despite an increase in the net tax it collected in 2011-12, the ATO has upped its assistance to small businesses with short-term financial difficulties – through tailored and sometimes interest-free payment arrangements, remission of interest and penalties, and full or partial release from payment of certain debts. As of June 30, 2012, there were around 280,000 payment arrangements in place worth $3.8 billion, and of those 35,900 were interest-free arrangements for small businesses worth $688 million. The ATO’s “no strings attached” small business assistance program also involved it contacting over 10,500 small businesses within identified regions and offering them tailored assistance and on-the-ground support on taxation and superannuation matters.
Grants back on the cards for small businesses
Small businesses can now access a range of grants which have been put back on the table after Commercialisation Australia and the Clean Technology Investment Programs lifted the temporary freeze on grants in a bid to find Budget savings. Apart from also lending funding to the two programs above, the government allocated money towards Enterprise Connect, Innovation Investment Fund and the Clean Technology Innovation Program.
Banks tighten lending conditions for SMEs: Survey
A survey from global financial services company UBS has found that more Australian banks are tightening their lending criteria for SMEs in response to the current economic climate and concerns over housing market prospects – a blow to SME owners hoping to obtain credit to finance new ventures. However, the survey indicated that banks are slightly more optimistic about credit growth, with loan officers now expecting credit growth to be 5% next year, as opposed to 4% during the last survey.
Government does not offer enough help to family businesses: PwC
The majority of family-run businesses do not feel adequately supported by the government, according to a PricewaterhouseCoopers (PwC) global survey of 2,000 family businesses. According to the survey, family-run businesses want:
- more flexible taxation in the form of tax reductions around succession planning and incentives
- measures that create a level-playing field
- more government contracts for small family-run local businesses
- less bureaucracy and red tape
- a limit on regulation/legislation, especially around human resources; and
- education and investment in future employees and industry training.
Australia 10th easiest country in the world to do business in
Australia beat its score of 11 last year and edged out Finland, Sweden, Canada and Germany when it came to the easy countries in the world to do business in, according to the World Bank’sDoing Business Project. The report also found that Australia is the second easiest country in the world to start a business. In particular, it only takes two days to register a business in Australia – compared with the OECD average of 12 days. Also, businesses only have to undergo two procedures to register their businesses – compared to the OECD average of five procedures. However, Australia still has to work on protecting its investors; its payment, time and total tax rates as well as ease of trading across borders – respectively ranked 70, 48 and 44 globally.