A small business tax “holiday”, a red tape reduction taskforce, and freezing the alcohol excise are just a few suggestions business groups have put to the government ahead of the 2025-26 federal budget.
Friday is the final day the Treasury will accept submissions ahead of the March 25 federal budget, prompting representative groups to share their views on how the government can best support small business.
In its submission, the Council of Small Business Organisations Australia (COSBOA) calls for a “tax holiday” or lower tax rates for new small businesses, which it says could provide relief to employers struggling through a tough economic environment.
A tax “holiday” could provide an “opportunity for new businesses to maybe get a bit of a waiver and get that cash flow coming through, allowing them to spend more of the money on investment and on building their business,” COSBOA CEO Luke Achterstraat told SmartCompany.
New businesses would face ‘normal’ tax rates once establishing themselves, with the holiday subject to “appropriate avoidance measures” ensuring mature businesses pay tax as per usual.
“We are interested in exploring the small business corporate tax rate itself,” Achterstraat continued.
“We feel that that could, and that should be lowered.”
Those COSBOA proposals come as the Australian Taxation Office pursues around $50 billion in collectable debt, much of it held by small businesses.
COSBOA has also called for the Small Business Technology Investment Boost to return, granting eligible small businesses a ‘bonus’ 20% tax deduction for upgrades like new computer systems, software, and e-commerce capabilities.
Treasury data shows the program, which covered spending between March 2022 and June 2023, resulted in $1.15 billion in forgone tax revenue.
“The reason we support that program is, again, actually trying to incentivise more business owners at the street level,” said Achterstraat.
“It’s actually saying to them, ‘Look, you guys know your business better than anyone, so you go and make investment decisions and we’ll reward you.’”
The submission echoes other recent proposals from the organisation, including the expansion of the instant asset write-off scheme, reworking the legislative definition of ‘small business’ to include more employers, and the creation of a small business ‘advocate’ function within Fair Work.
The Australian Chamber of Commerce and Industry (ACCI) devotes a large part of its submission to small business issues, agreeing with COSBOA on instant asset write-off expansions and the legal definition of ‘small business’.
It also argues Australia needs a Minister of Red Tape Reduction, saying a portfolio focused on “identifying and cutting superfluous red tape would give a new lease of life to businesses”.
And while the Fair Work Ombudsman will not pursue criminal charges against small businesses that unintentionally underpay staff, ACCI argues the FWO should provide binding advice on modern award matters, barring small businesses from punishment if they adhere to those views.
That advice should “act as a safe harbour where followed,” the submission said, with the secondary goal of reducing the need for costly legal advice.
The Restaurant & Cafe Association (ARCA) has used its submission to call for a freeze on alcohol excise hikes for 24 months.
Alcohol excise is indexed twice yearly according to consumer price index growth.
Surging inflation in recent years has propelled the alcohol excise skyward, and while inflation appears to be moderating, the excise will tick upwards again on February 3.
A 24-month freeze on those hikes would “allow cafes and restaurants to stabilise operations and
reinvest in their growth,” said the ARCA submission.
ARCA has also called for tips to service staff, which are reportable as taxable personal income, to become tax-exempt.
Giving tips the same tax treatment as lottery winnings or gifts could incentivise employment in the sector, the submission argued.
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Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
