On Wednesday, 23 March, the government pledged to take “decisive action to slash red tape and provide cash flow support” for over 2.3 million small businesses which it said would generate an annual compliance saving of $800 million every year.
The initiative includes lowering tax instalments in 2022-23 to 2 per cent, down from 10 per cent, and also aligning instalment payments with financial performance.
“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,” a statement released on Wednesday read.
“This measure will apply to the 2022-23 income year, in respect of instalments that fall due after the enabling legislation receives Royal Assent.”
The Budget includes measures to leverage technology to automate tax reporting requirements which government said will reduce compliance costs and improve processing times.
Businesses will also be able to calculate pay-as-you-go (PAYG) instalments based on financial performance and be given the option to report taxable payments reporting system data through software at the same time as activity statements.
Changing the uplift rate is not slashing red tape, this is a measure to help cashflow. Unfortunately this just highlights that the government and the bureaucracy that is advising them have zero idea of what red tape is.
Red tape for financial advisers is writing an SOA that clients don’t want but have to pay for, FDSs, PDSs, etc.
As anyone in financial services knows, the current Morrison / Frydenberg Liberal government loves red-tape and compliance. The Liberals are the party of Big Government.
Comment # 2 Calculating PAYG(I) based on actual sales has always been available. TPAR reports via the quarterly BAS might be a step forward… The present on-line reporting for TPAR is very sloppy software – it does not verify that the ABN I enter exists, or even meets the algorithm!
The uplift factor for PAYG(I) was 0% for the last two tax years. The Govt is imposing an uplift factor of 2%. That is hardly making life easier!! The percentage increase is infinite. From what I see, GDP is increasing, but profits in small business are not. Both sales and costs are increasing, but profits are not. Look at all the vacant shops in the High Street or shopping malls. GDP will rise because of repairs to flood damage, fire damage.