Australian industry presses for expansion of budget’s big business tax concession | Australia news

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Big business tax concessions could be expanded after warnings from industry the eligibility criteria unintentionally exclude local branches of global groups.

Under changes being considered by Treasury and industry groups, companies earning more than $5bn could gain access to the ability to immediately deduct the cost of capital assets, lowering their tax bill.

The $27bn measure was contained in Tuesday’s budget and passed the parliament with Labor support on Friday.

Industry is concerned that the $5bn “aggregate turnover” limit means offshore earnings of foreign affiliates will render ineligible companies such as paint manufacturer Dulux and food and beverage company Lion, owned by Japan’s Kirin.

On Monday the Australian Financial Review revealed that the treasurer, Josh Frydenberg, has asked the Business Council of Australia to discuss alternative criteria with Treasury to avoid unintended consequences.

Guardian Australia has confirmed the consultation is broader than the BCA, with other industry groups asked to identify their largest 500 members that may be excluded by the current definition.

After granting jobkeeper wage subsidies only to see some business recipients give out large dividends and bonuses, the government is keen to ensure that booming companies – such as supermarkets, miners and global tech giants that already pay little tax – do not benefit.

The business lobby is hoping that amendments or other regulations could lower the bar to access the concession, with only the biggest banks and miners excluded.

On budget night, Frydenberg said that “over 99% of businesses will be able to write off the full value of any eligible asset they purchase for their business” until June 2022.

Responding to the AFR report on Monday, the treasurer confirmed that he had “said to the Business Council to engage in a discussion with Treasury about that”.

“I wouldn’t want to pre-empt any of those discussions,” he told Channel Nine’s Today Program.

“But we’ve announced very significant and generous incentives to business to create jobs and to bring forward investment, it will cover around $200bn of investment, around 80% of non-mining investment in this country and that’s a really important initiative to help create jobs.”

Frydenberg said that – together with the ability of companies to claw back tax already paid against losses to June 2022 – instant expensing will create 50,000 new jobs.

On Sunday, Scott Morrison left open the possibility that budget measures will be subject to change or new measures announced if the budget failed to stimulate the economy.

Asked what would happen if business tax concessions fell short, Morrison told reporters in Redbank, Queensland that the government had “been able to respond and respond fast” to changing circumstances.

“This is why we’ve been careful to announce initiatives, taking into account the best information we have at the time.”

“And so what you’ll find from our government, as we manage the Australian economy through its biggest set of challenges since the Great Depression, is you’ll find us highly responsive.”

Morrison said that any budget changes will be “targeted” and “proportionate” but the government would be “careful to monitor the situation very carefully and to respond and upgrade as necessary”.

Morrison brushed off suggestions that additional safeguards or amendments may be needed to win Labor’s support for the jobmaker hiring credit, $6bn of wage subsidies to hire workers 35 and under.

“Well, I wouldn’t see why I’d have to [make concessions]. Why would the Labor party want to oppose getting young people into work?”

Although Labor has decided to support the government’s plan to accelerate income tax cuts and more than $30bn in business tax concessions, it has not reached a final position on the hiring credit program, which is contained in a separate bill.

Labor and the Australian Council of Trade Unions are concerned credits of $200 a week for those aged 16 to 29 and $100 a week for those aged 30 to 35, do nothing for those aged 36 and over and may incentivise businesses to lay off or reduce the hours of older workers.

The shadow employment minister, Brendan O’Connor, has raised concerns that the hiring credits bill does not contain safeguards, not even those already promised that businesses must increase payroll and head count to qualify.

Hafta Ichi
Source: The Guardian
Keyword: Australian industry presses for expansion of budget’s big business tax concession | Australia news

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