New research from MYOB shows that over half (56 percent) of Australian small businesses agree that the company tax rate should be cut in order for the country to remain globally competitive.
The Business Council of Australia recently commented that Australia’s company tax rate is globally uncompetitive and should be reduced immediately. The most recent SME Snapshot from MYOB shows that 53 percent of the 400 plus startups and small businesses surveyed were more likely to invest back into their business if the company tax rate was lowered. Simplifying the GST/BAS tax was likely to have a similar effect, at 49 percent.
“It was encouraging to see the government lower the company tax rate to 28.5 percent for businesses with an annual revenue of $2 million or under in last year’s budget. However, company tax affects businesses of all sizes,” said Tim Reed, CEO of MYOB.
“The current system discourages SMEs to grow beyond $2 million in revenue because they then lose many of the benefits of being a small business. These barriers to growth need to be removed.”
The finding aligns with previous MYOB Business Monitor survey results.
“When we asked Australian SMEs what they would do with financial savings from a company tax rate cut, just under half (48 percent) of respondents said they would keep this money to increase their financial position and weather any future business challenges,” said Reed.
This month’s SME Snapshot also asked small businesses if they were investing in innovation. While the vast majority of SMEs (85 percent) agreed that Australia needed to embrace innovation to deliver success, only 4 percent of those surveyed admitted to investing a set dollar amount towards innovation.
“We are seeing that Australian SMEs are struggling to invest in innovation,” said Reed.
“However, knowing that 36 percent of business owners would use a cut in the company tax rate to invest more in their business is certainly encouraging. Australia needs its economic engine room firing on all cylinders, and having small and medium businesses invest more will go a long way to securing our prosperity.”
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