Federal Shadow Small Business Minister Steven Ciobo has slammed the Federal Government for not doing enough to help small business, and says it should instruct the tax office to be more flexible with some tax provisions to ease the cash flow squeeze.
Ciobo wants the Government to introduce flexibility for small businesses that are revising their PAYG tax installments.
SMEs typically estimate their quarterly PAYG installments based on the previous year’s results. As the economy slows, SMEs will revise down their quarterly estimates, but this can be risky – if the estimates are 15% outside the actual PAYG amount due, the SME will face penalties and interest.
Ciobo wants the variable allowed before penalties and interest are levied to be increased to 30%.
“The less tax they pay to the ATO, the more cash they have sitting in the business,” Ciobo says. “It’s a cash flow management tool.”
Ciobo says the extra flexibility could be bought in for the 2008-09 financial year to help SMEs get through the current crisis.
“It’s not an on-going measure. It takes into account what are pretty unique circumstances. We think that unique circumstances require unique policy initiatives.”
Ciobo says SMEs are disappointed with the Rudd Government’s treatment of small business during the crisis. While the Government has been quick to come to the aid of large industries such as the automotive sector, SMEs have been largely ignored.
“Labor just does not get the relationship between small business and employment in this country,” he says.
“They will remain stubbornly mute when it comes to taking a decision that would have a positive impact on small businesses across Australia and would potentially save thousands of jobs.”
Federal Small Business Minister Craig Emerson could not be contacted for comment today, but at a small business summit in Melbourne last week, Emerson dismissed calls for payroll and capital gains tax relief for SMEs, saying the damage to Government revenue would be too great.