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While tax cuts for large enterprises have essentially been ruled out following the election, KPMG believes there is still scope for tax reductions for SMEs.
Peter Nash, chairman of KPMG Australia, said there is common agreement between both major parties that corporate tax cuts for SMEs are a positive step, so reforms in this area are achievable.
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However, Mr Nash said that for this to happen, there would need to be negotiations between the two parties on how they define small business.
“Labor defines small business as $2 million and under, which is almost irrelevant, because $2 million is not small business, it is micro-business,” he said.
Mr Nash said Labor will need to increase its threshold, while the Liberal Party will need to reduce its definition.
“Big business won’t like that, but if we’re in an environment where we’re looking for compromise, maybe that’s one thing where they can find that common ground,” he said.
KPMG tax partner Grant Wardell Johnson said there may also be other methods for reducing the effective company tax rate, such as investment allowances.
“I know there’s one major think tank that has advocated [investment allowances] recently,” he said.
“That could have a similar effect, but be more attractive to some of the other parties.”
