Consensus opens way for tax cut
SMALL and medium sized businesses across Australia have been guaranteed a tax cut within the next three years.
The assurance comes as Labor threw its support behind the Federal Government’s plan to deliver tax relief to companies with annual turnovers of less than $50 million, five years earlier than planned.
Under the Coalition’s plan, the businesses will have their tax rate dropped to 26 per cent in 2020/21, then to 25 per cent the following year.
The move comes after the businesses already had their rate reduced from 30 per cent to 27.5 per cent last year.
Labor Leader Bill Shorten said the Opposition’s support for the further cuts, which Prime Minister Scott Morrison earlier said was a point of difference between the parties, was about giving certainty to businesses.
Mr Morrison said Australia’s small and medium businesses know his government has their back.
“What we’re doing for those businesses is getting their taxes down and we’re going to get their electricity prices down,” the PM told ABC TV.
The tax cuts will cost about $3.2 billion, and while both sides of politics now support them, they each have a different plan for footing the bill.
The Government would use money it didn’t get to spend on tax cuts for bigger businesses, which were knocked back by the Senate in August.
Labor wants to pay for the cuts by delaying its proposed Australian Investment Guarantee by 12 months.
The guarantee would give all businesses in Australia the ability to immediately deduct 20 per cent of any new eligible asset worth more than $20,000.