The Federal Government’s amendments to its proposed capital gains tax (CGT) and trusts reforms are a “rushed patch-up job” and do not address the broader damaging impact on business, the Australian Chamber of Commerce and Industry (ACCI) warns.
This includes increasing the turnover threshold for the existing small business 50% discount from $2 million to $10m, which the Government said would apply to 98% of all active small businesses.
Discretionary testamentary trusts would also be exempt from the 30% minimum tax rate provided they are established as “genuine testamentary businesses”.
Changes don’t go far enough to support business
ACCI Chief Executive Officer Andrew McKellar welcomed the exemptions but said major flaws remained.
“The Bill still imposes a significant new tax burden, penalising investment in a wide range of businesses,” he said.
“This is really a rushed patch-up job trying to deal with the welter of criticisms since the Budget, so the Government can rush the legislation through Parliament with as little scrutiny as possible.
“The fact remains that Australia will have one of the highest CGT rates in the developed world. That will deter business investment and significantly slow productivity growth.”
Bill should go back to the drawing board
The Government is considering carve-outs for “innovative” startups, with consultations closing July 10.
But McKellar said the reforms needed a full rethink.
“Targeted concessions may provide some relief, but they do not fix the underlying problem,” he said.
“Businesses need a tax system that encourages investment across the entire economy, not one that penalises it.”
ACCI is examining the Government’s consultation paper but said it already posed significant questions.
“Again, the Government appears to be trying to mitigate the damage in certain areas, but innovation is incredibly broad,” McKellar said.
“Innovation exists across all sectors and all types of business. The Government must recognise this.”
Want to keep up to-date with the latest business news and advice? Become a CCIWA Member today and get access to exclusive information and services designed to help you do business better. Find out more here.
