$720m injection to save jobs
Thursday, 2 April 2009
Small businesses will be excused from paying more than $700 million in taxes in an effort to save Australian jobs.
The Federal Government will give a $720 million cash-flow boost to small businesses, self-funded retirees and small superannuation funds struggling because of the global recession.
In a joint statement made by Treasurer Wayne Swan and Small Business Minister Craig Emerson, they say the move is aimed at freeing up cash flow to provide further economic stimulus.
Under the plan, pay-as-you-go tax (PAYG) instalments will be cut by about 6 per cent for about 1.5 million taxpayers in the 2009-10 financial year.
The cut would allow what "would otherwise be overpaid tax collections" of about $720 million to stimulate the economy and help protect jobs, Mr Swan and Mr Emerson said.
Under the plan, pay as you go (PAYG) instalments will be cut by about 6 per cent for about 1.5 million taxpayers in the 2009/10 financial year.
The government will cut the quarterly PAYG instalments for taxpayers whose quarterly tax instalments are adjusted based on the previous year's GDP growth.
Tax instalments will be calculated based on the expected Consumer Price Index increase for 2009/10 rather than using the previous year's GDP (Gross Domestic Product) growth.
"This will better align the tax treatment of small businesses, self-funded retirees and small superannuation funds with changing economic conditions and help prevent businesses paying too much tax," the statement says.
While many small businesses, individuals and superannuation funds can vary instalments by themselves, the government says many of them - especially those with unpredictable income streams - are often reluctant to do so.
"This action by the government will reduce uncertainty for taxpayers and relieve them of the burden of doing their own calculations."
Businesses who pay their GST on a quarterly basis will also benefit from the plan as the tax office will use the two per cent adjustment factor when they calculate GST instalments.