The Business Council of Australia kicked off a company tax cut campaign ahead of the Australia Day weekend, lining up business leaders from Wesfarmers, Rio Tinto, MYOB, AMP, Xero, and Qantas to assure politicians that a cut will lead to greater investment?—?something the Treasurer has also been arguing more forcefully since the US cut its corporate tax rate (from 35 per cent to 21 per cent) last year.
This week the Prime Minister confirmed that personal income tax cuts for medium income earners would be a priority under a Coalition government, long before a further reduction in company tax cuts?—?noting that there are still significant tax cuts for business on the table but not yet through the Parliament.
Prime Minister Turnbull has been raising the prospect of personal tax cuts throughout the summer. In a speech to the Business Council of Australia in November 2017, he signalled his intention to reduce the tax burden on middle income workers, and this week confirmed it would be the main focus in the lead up to the May Budget.
Meanwhile, the small business tax rate for companies with revenues under $25 million is currently 27.5 per cent, and for those with higher revenues it is 30 per cent. From the next tax year (2018–2019) the lower rate will apply to businesses with revenues up to $50 million. In the 2024–25 tax year the lower rate begins to drop, first to 27 per cent, then 26 per cent the following year, before dropping to 25 per cent in 2026–27.
This stepped schedule is due to the support of former Senator Nick Xenophon for the $50 million threshold in March last year.
The Business Council of Australia and others are lobbying the Crossbench so that larger companies with revenues can be included in the pathway to 25 per cent by 2026–27. Although not a focus of the debate, there are many small and medium enterprises who would benefit from the reduction of company tax beyond the $50 million, including companies which sell high value goods and by virtue of that tend to be over the threshold pretty quickly, despite having small staff numbers.
Despite passing the Senate last year and coming into effect, Labor continues to oppose the tax cut, and has only agreed to back cuts for businesses with revenues up to $2 million, though Shadow Treasurer, the Hon Chris Bowen MP, has gone on the record a number of times saying he would consider support for businesses with revenues of $10 million.
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