Introduction
Australia's Prime Minister, Mr Abbott, has said that "small businesses of today are likely to start new industries of tomorrow." In Australia, the tax reduction scheme has been applied because the government cares about the concerns of small businesses. The economy of Australia is one of the fastest growing in the developing world. Tax reductions in Australia are primarily intended to motivate small businesses.
According to current taxation policies, financial accounting calculates how much a company should pay in taxes. Our experts can offer you finance assignment help to enhance your preparations since understanding the basics and completing assignments in finance is a challenging task for students.
Features of tax reduction in Australia
- Small companies now benefit from a reduction in their tax rate from 30% of their income to 28.5% of their income. This means they are saving 1.5% on tax. In Australia, it is the lowest in the last 50 years.
- The tax benefits for sole traders or partners who conduct their business without setting up a company are further enhanced. As a result, they get a 5% tax discount on their overall tax bill. Which can be seen as a big step in favour of small businesses.
- Previously, share buyers were required to pay tax on each purchase, regardless of whether or not they made a profit. Share buyers must pay tax only if they receive any benefits from the share.
- Business owners are no longer eligible to pay capital gains tax if they have changed the legal structure of their business.
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Effects of tax cuts on small businesses in Australia
Here is a list of how tax reduction has affected small businesses in Australia.
The Number of jobs were increase
Due to the tax cut, small businesses were able to hire more employees than big firms. However, the increase in jobs did not have any impact on the wages of employees. We can therefore say that while the number of jobs increased, wages remained the same. Companies whose text was shortened or reduced increased their employment.
Increase the investment
It was noted that companies whose tax rates were reduced increased their investment. And it was found that about half of the tax that was cut was saved as earnings only.
Lack of awareness may have decreased investment
Some of the companies do not realize that they are prevented from taxing and making more money. Consequently, they cannot make any investments or provide job opportunities.
Increase in opportunities
It was estimated by Mr Abbott, Australia's prime minister, that a small tax cut would increase these opportunities.
- Once people learn about tax reductions, they start borrowing money and starting their businesses.
- Increase opportunity
- Number of jobs were increased
- Make your job secure
- Boost productivity
- Fair savings
Epilogue
The 2015-2016 Federal Budget introduced a several interesting changes to Australia's tax landscape. To improve small business cash flows and increase competition, the Australian government has introduced incentives, including two significant tax cuts.
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