Article sourced from: The Australian, Helene Zampetakis, June 26 2009
Small-business owners watching their income steadily shrink this year are likely worrying that they could end up paying too much tax when the quarterly pay-as-you-go instalments become due next month.
“Anyone doing business today would be horrified at the prospect of making payments based on last year’s business conditions,” notes Terry Hayes, senior tax writer at Thomson Reuters. “The principal of provisional tax is logical in that it helps small business keep up with payments. But the difficulty for smaller businesses is to guess their future income.”
From next financial year, however, small-business owners will get some relief from new concessions that calculate PAYG tax on the basis of an uplift factor of 2 per cent rather than 9 per cent. This factor refers to the formula used to calculate likely economic growth for a later year.
“This effectively puts more money in the business and is a cash-flow bonus for small-business owners, who have been looking at a lot of red ink lately,” says Hayes.
“It will help no end to reflect the reality of their situation.”
But while it’s a welcome reprieve, it won’t go far enough for business owners feeling the pinch badly.
Recent Comments