Small businesses to get (temporary) tax relief

MORE than a million small businesses will get relief on their tax bills in the new year to help cope with the economic slump.

In a fresh move to prop up the economy, the Federal Government will cut the December quarter tax instalment for small businesses by 20 per cent. Most businesses pay the instalment in February.

The Government will announce the move today as more danger signs emerge, with unemployment edging up for a second successive month and with China suffering a slump in exports and imports — a development one analyst described as a disaster for Australia.

About 1.3 million Australian businesses with an annual turnover of $2 million or less will qualify for the tax relief.

The Government says the reduction in the December quarter instalment will more accurately reflect small businesses’ average actual profit growth in the current economic environment.

It says it will provide immediate and much-needed cash flow relief to small businesses and encourage small business confidence.

If a business’s income ultimately justifies higher tax than is paid, the business will have to make up the unpaid amount later. But it will have had advantage of the cash until then.

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