Starting from 1 July this year, the tax rate for small businesses will be reduced from 28.5 percent to 27.5 percent.
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Treasurer Scott Morrison used his first budget speech to warn multinationals the government was increasing its efforts to make sure “everyone pays the tax they should on what they earn in Australia, not avoid tax by shifting profits offshore”.
Along with a cut in their tax rate from 28.5 per cent to 27.5 per cent, the turnover threshold for eligibility has been raised from $2 million to $10 million.
“Instead, mum and dad business owners reinvest this money into their enterprise; they buy more equipment, they hire more staff, and as big businesses continue to down-size and out-source, it’s the SMEs that are creating the new jobs, especially for the younger generation”. This was previously announced last year, with businesses with a turnover of less than $2 million per annum getting a 1.5 percentage point reduction in tax rate.
As anticipated, the budget promises to prevent average full-time wage earners from moving into the second highest tax bracket.
A lot is riding on Australian Treasurer Scott Morrison’s economic plan, which doubles as the government’s pitch to voters.
“But we are very mindful that around the country this transition is being felt more acutely in some places and by people in some occupations and some industries more than others”, Mr Morrison said.
The proposed DPT or so-called “Google tax” will tax multinationals on income they have sought to shift offshore at a penalty rate of 40 percent – well above the current 30 percent company tax rate. “In Australia, poverty is on the rise, with an estimated 2.5 million Australians living below the poverty line, including more than 600,000 children”, UNICEF Australia CEO Adrian Graham said.
Now that the government has outlined their budget plan, it had us thinking, what would our budget look like for 2016/17 financial year?
But Mr Morrison agrees that by the end of a decade the world could have moved on, still leaving Australia with one of the highest company tax rates in the world.
Mr Morrison pointed to the expansion of the middle-income tax bracket in response to whether or not the budget passes the fairness test.
The Greens welcomed measures that aim to crack down on multinational tax avoidance.
The Australian Liquor Stores Association has welcomed the changes to Australia’s taxation system and the drive for youth employment announced in the Federal Budget.
Morrison stressed there would be no increase in the projected tax burden as a share of GDP, compared to last year’s budget.
Annual hikes in tobacco tax from September next year are expected to raise AU$4.7 billion over three years.
The Antipodes email: John Key, his lawyer and foreign trusts Brian Gaynor: Tax haven status good news for some Rakon – this time lucky? .
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In last year’s budget, the government announced a “Multinational Anti-Avoidance Law” aimed at stopping multinationals using complex schemes to escape paying tax.
