(31 March 2009 – Australia) The Federal Government has announced a tax change that is set to provide extra cash flow amounting to A$720 million for small businesses struggling to find bank funding.The Federal Treasurer, Wayne Swan, with the Minister for Small Business, Craig Emerson, announced a plan to cut pay-as-you go (PAYG) instalments for around 1.5 million taxpayers for 2009-10.
Swan said in a media release that the change will provide further cash-flow relief for small businesses at a difficult time.
The reduction will provide cash flow benefits to around 1.5 million taxpayers, cutting their PAYG instalments by around 6 percent. This will ensure that their PAYG instalments more closely approximate their actual income tax liability for the year.
Swan said that the change will provide a further economic stimulus to support Australian jobs, because taxpayers will have the use of what would otherwise be overpaid tax collections of around $720 million in 2009/10.
The Rudd Government will cut the quarterly PAYG instalments for the 2009/10 income year for taxpayers whose quarterly tax instalments are adjusted for previous years’ Gross Domestic Product (GDP) growth.
The Government will use the expected increase in the Consumer Price Index for 2009/10, rather than previous years’ GDP growth, to calculate tax instalments.
This will better align the tax treatment of small businesses, self-funded retirees and small superannuation funds with changing economic conditions and help prevent businesses paying too much tax.
For the 2009/10 income year, the Government has reduced the GDP adjustment from 9 percent to 2 percent, aligning it with the expected Consumer Price Index (CPI) growth of 2 percent for 200/10, as forecast in the Government’s Updated Economic and Fiscal Outlook.