The Council of Small Business Organisations Australia (COSBOA) is calling on small businesses operating through discretionary trusts to share how the Government's proposed tax changes could affect their business.
The recently released consultation paper confirms many small businesses could face a difficult choice between paying a higher tax bill each year or undertaking a costly and complex restructure.
Around 350,000 Australian small businesses operate through discretionary trusts, including family-run trades, retailers, hospitality businesses, professional services firms and other local employers.
COSBOA CEO Skye Cappuccio said it was essential that the consultation process hears directly from the small business owners who could be affected.
"Behind these proposals are hundreds of thousands of small businesses and Australian families," Ms Cappuccio said.
"The consultation paper confirms many of the concerns small businesses have already raised, including the potential for higher tax bills, significant restructuring costs and additional complexity.
"Government needs to understand what these changes would mean in practice: whether businesses would have less money to employ staff, invest in equipment, repay debt, manage cash flow or support their families.
"We are asking small business owners to tell us how the proposal could affect them so their experiences can help inform COSBOA's advocacy and the broader consultation process."
COSBOA has raised concerns that the proposed reforms could:
- impose a minimum tax burden on income distributed through discretionary trusts;
- leave family members effectively facing a minimum tax rate of 32 per cent once the Medicare levy is considered;
- force some businesses to consider expensive restructuring; and
- create accounting, legal, financing and potential stamp duty costs that may not be covered by proposed rollover relief.
COSBOA supports measures that directly address clearly identified integrity concerns but does not believe genuine small businesses should be caught by a broad policy response.
"Taxing small businesses more will not create a fairer or more productive economy," Ms Cappuccio said.
"Small business owners deserve the opportunity to be heard before legislation is introduced."
Small businesses can share their experiences through COSBOA's Fair Go for Small Business campaign at: https://fairgo.cosboa.org.au/
COSBOA will use the experiences shared through the campaign to strengthen its representations to Government during the consultation process.
