Ombudsman tackles tax time trepidation for small business

Business owners are facing an increasingly stressful end of financial year thanks to COVID-19, but calls for considerable changes could simplify tax compliance requirements.

BUSINESS owners will face an increasingly stressful end of financial year thanks to COVID-19, but major taxation framework changes could ease the pressure.

When local small business owner Will Priestley suffered a cardiac arrest in 2017 and was told to reduce stress, he found coping with taxes far from ideal.

“It was a very stressful experience trying to manage and catch up,” he said.

“I was fortunate enough to get things on the right track again, but there does need to be understanding for when people have had circumstances out of their control.”

Co-owner of The Standard, Will Priestley, as there are proposed changes to tax to help out small business during the COVID-19 pandemic. Picture: Zak Simmonds

The owner of ventures such as Harlequin, The Standard and Pilgrim, said COVID-19 had compounded anxiety in an already busy time of year for small businesses.

Australian Small Business and Family Enterprise Ombudsman Kate Carnell has called for considerable changes to simplify tax compliance requirements.

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The changes include shortening the Australian Taxation Office tax return review period to one year following lodgement, permanently raising the small business instant asset tax write-off from $30,000 to $150,000, and abolishing the Fringe Benefits Tax.

Ms Carnell said the current system required small businesses to act as the ATO’s “unpaid tax collectors”.

“When an unintentional error is found, the small business should be given the opportunity to rectify it,” she said.

“Ultimately, small businesses need to be released from the burden of unnecessary regulation and onerous compliance requirements, along with the fear of ATO recovery action and severe penalties.”

Australian Small Business and Family Enterprise Ombudsman Kate Carnell.

A Hobart tax agent, who wished to remain anonymous, said abolishing FBT was a “great” initiative but was open to abuse.

“If they targeted it at cars, lunches, gyms and childcare, I think it would work,” he said. “Currently, most small businesses have cars that are for both personal and business use, and the confusion over how much is deductible or if FBT applies in the general community is high.”

However, he warned shortening the review period from five years to one would not stop the tax office “going back forever” if they suspected fraud.

He said constantly shifting JobKeeper and recovery-related goalposts provided another headache for small businesses.

Mr Priestley said he welcomed JobKeeper and the proposed tax changes, but felt the ability to write off assets worth $150,000 served more profitable businesses.

He said incentivising small businesses to fund professional accountants and migrating their systems online could also assist. “I think that’d take a lot of the stress out of bookkeeping,” he said.