Government vows to support small business, self-funded retirees in Budget
Small business owners and self-funded retirees will get a boost from the upcoming Federal Budget, with the government pledging to lower uplift rates, digitalise trust income reporting and improving the pay-as-you-go (PAYG) system.
Announced on Wednesday, Treasurer Josh Frydenberg said the GDP uplift rate that applies to PAYG instalments and GST instalments will be lowered to 2% for the 2022-23 financial year. Normally, the rate is set at 10%.
"A lower uplift rate will mean lower instalments, delivering $1.85 billion in cash flow support for 2.3 million small to medium businesses, sole traders and individuals with passive income (including some self-funded retirees) that are eligible to use the instalment amount method," Frydenberg said.
Companies will also be allowed to calculate PAYG instalments based on financial performance. If performance declines, then companies may be able to get refunds of instalments that are paid automatically.
This measure is initially expected to support more than 500,000 companies with PAYG instalment obligations, and new systems to implement the measure should be in place by December 31, 2023, Frydenberg said.
The government has said it will also facilitate sharing of single touch payroll data with State and Territory governments on an ongoing basis to cater for pre-filling payroll tax returns, with the government's IT system upgrade to support this expected to be completed by late 2023.
"This will facilitate further investments by States and Territories in their own systems to improve lodgement accuracy, reduce compliance costs and save time for the approximately 170,000 businesses that have payroll tax reporting obligations," Frydenberg said.
New South Wales, Victoria, Western Australia, South Australia, Queensland and Australian Capital Territory are already participating in a trial data transfer to understand how STP data can deliver benefits to their payroll-tax clients, he noted.
Meanwhile, by mid-2024 systems will be developed to ensure all trusts have the option to lodge income tax returns electronically.
"Digitalising the reporting of trustee and beneficiary obligations will reduce errors and processing times and create capacity to pre-fill beneficiaries' tax returns," Frydenberg said.
There are just under one million trusts and around 1.8 million beneficiaries in the Australian tax system, the Treasurer said, and this will enable digital lodgment for up to 30,000 trusts currently lodge by paper.
More measures for SMEs are expected to be announced in the Federal Budget next Tuesday.
This article first appeared on Financial Standard
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