Mr RAMSEY (Grey–Government Whip) (19:45): I must report to the House how pleased I am and how pleased my businesses are with the recent tax cuts that the government has legislated through and that will be flowing through to small and medium businesses from 1 July. We are, of course, immediately cutting the company tax rate to 27½ per cent this financial year for businesses with a turnover of up to $10 million. This will be extended to businesses with a turnover up to $25 million from 1 July and to businesses with a turnover up to $50 million from July next year. By 2026, that rate of taxation will drop to 25 per cent. The feedback I am getting is very encouraging, indeed.
We are also changing the definition of small business to include those with a turnover up to $10 million from the previous $2 million. Also, these small businesses will be able to immediately access the instant tax asset write-off, allowing business to write off up to $20,000 worth of new equipment and claim it back straight away. This special measure has been as a result of the budget being extended through to June 2018. I could certainly say that, as a member who has an interest in farming, even though I am not operating that farm at the moment, farmers are very pleased with that outcome. So are the small businesses. I was speaking to the operator of a large automotive supply business the other day, and a lot of the custom that walks in through his door is for the business community. A lot of the things they sell are under $20,000.
Businesses can also take advantage of simplified trading stock rules, with the option to avoid end-of-year stocktake if the value of stock has changed by less than $5,000. This measures in with the government’s plan to try and reduce red tape. So there is no need to do this. We do not want to make you do it.
We have simplified the method of paying PAYG instalments as calculated by the ATO, removing the risk of under- and over-estimating PAYG instalments and the resulting penalties that may be applied. There is also an option to account for GST on a cash basis and pay GST instalments as calculated by the ATO. And there are other tax concessions currently available to small businesses, such as fringe benefits tax exemptions, simpler business activity statements and reducing GST compliance costs from 1 July.
Very importantly, I quite commonly get from people, ‘The tax cuts that you announced are all about company tax. We’re not a company; we’re a partnership,’ or, ‘We’re operating as a trust.’ The government has not ignored this sector, either. Businesses that are not incorporated and have turnovers of less than $5 million will have an eight per cent discount applied to their total tax bill. So you could imagine, Mr Deputy Speaker, that somebody who might, for instance, have a $20,000 tax bill will have that reduced by eight per cent, which is about $2,000-$1,600, to be precise. It is quite significant. It is a real shot in the arm. It is the kind of thing that makes businesses say, ‘We are making a dollar here. Maybe we can employ someone else to make life a little bit easier for ourselves.’
The coalition government’s lower taxes mean that we are taking less out of the hand of hard-working small-and-medium business owners who employ six and a half million Australians. That is quite a figure-six and a half million Australians. When we look around Australia today at the unemployment rate, it is not that bad. It has been worse before. But it could certainly be better. Certainly, in my electorate of Grey and in the upper Spencer Gulf regions-in particular, the industrial base-those unemployment rates are higher than that.
So we really do look to our small and medium businesses to expand. This is why we try to give them confidence; to have a go, to put on that extra worker and possibly find that new market. The whole thing is more than a direct win for half of Australia’s workforce. It also allows the flow-on to the rest of Australia, with better productivity outcomes and the opportunity to grow those jobs. So I thank the Senate for finally agreeing to those changes to tax laws. My businesses in Grey are very pleased with the result.