CPA Australia calls for extended tax credits

Date: 07.05.2009

Next week’s Federal Budget must deliver tax credits for SMEs to help them through the worst of the economic downturn, according to CPA Australia

Next week’s Federal Budget must deliver tax credits for SMEs to help them through the worst of the economic downturn, according to CPA Australia.

President Richard Petty says assistance directed at small businesses will avoid potential impact on more than four-million jobs.

"That is why we believe any future stimulus package must extend tax breaks in the form of tax credits to the SME sector which could boost business investment by billions of dollars," he says.

"CPA Australia believes the Government should extend the proposed small business tax break by 12 months," he says.

"Further to this, the Government should ensure the benefit is available to business as a fully refundable tax credit which is available when businesses lodge their business activity statements."

These terms will mean that a wider range of businesses can take advantage of the tax break without waiting to lodge an end-of-year tax return, he says.

Petty says a more flexible approach to paying tax as you go would assist businesses by allowing them to reduce the impact on cash flow.

"The Government must be more flexible in its approach to PAYG tax instalments. We acknowledge that the Government has already reduced the February 2009 PAYG instalment by 20 percent but more can be done," he says.

Due to possible penalties for getting PAYG variations wrong, Petty says it is likely businesses will not take the risk and continue to overpay their PAYG instalments.

"These rules should be reviewed and made more flexible to enable businesses to more confidently vary their PAYG instalments where their circumstances have changed, and improve their cash flow," he says.

Other budget initiatives recommended by CPA Australia include a higher research and development tax concession, accelerated depreciation for capital expenditure and an up-front investment allowance of 20 percent for capital expenditure on low-emissions technology.

The Federal Budget will be revealed on May 12.