Skip to main content

News Feature

Small business tax cut to 20% 'a $11.4b boon for economy' says COSBOA

ELECTION 2025 >> Economic modelling from the Council of Small Business Organisations Australia (COSBOA) has found reducing the small business company tax rate would boost the economy by up to $11.4 billion dollars and provide up to 3370 permanent jobs.

The independent modelling, based on a small business tax rate cut from 25% to 20%, found the move was “fiscally prudent” and “good economic policy”, stimulating cashflow and business growth to provide a “net benefit to the Australian community”.

COSBOA CEO Luke Achterstraat said the modelling clearly illustrated the proposal would lead to economic growth, innovation, higher productivity and more opportunities for Australian small businesses.  

“The modelling confirms what we have heard from countless small businesses across the country: a tax cut would boost small business cashflow, re-ignite investment and increase output, wages, jobs and economic growth,” Mr Achterstraat said.

“In aggregate, national income would rise appreciably, indicating that the policy provides a net benefit to the Australian community.

“Under this modelling, GDP would be boosted by up to $10 for every $1 in foregone tax revenue – that’s a compelling return,” he said. “The flow-on effects of higher incomes and job creation assists in significant tax clawback and minimal impact on the budget. It is not just a win for small business, it’s a win for all Australians.”
 
Mr Achterstraat said the 2025 election campaign has so far been devoid of any significant economic reform.

“With two weeks of campaigning left, this policy is free to be adopted by the major parties as a clear path forward for small businesses across Australia. The numbers are in – we can’t afford not to cut the small business tax rate to 20%.

“It is fiscally prudent, targeted and will produce a growth dividend in uncertain economic times,” he said.
 
“Moreover, this is good economic policy because it addresses a significant burden on small business — especially after the GFC and Covid periods: it improves access to cashflow and credit on reasonable terms.”
 
The economic impacts of the tax cut were modelled using three policy scenarios:
 

  • an immediate 5% reduction to 20% in 2025-26;
  • a phase-in approach where the rate reaches 20% in 2027-28;
  • a phase-in approach where the rate reaches 20% in 2029-30.

 
Across all scenarios, the modelling shows the tax rate reduction would boost small business cashflow, increase post-tax retained earnings, loosen credit constraints, reignite investment and spur productivity, wages, jobs and economic growth. In aggregate, national income would rise, with the boost to GDP significant relative to the low cost of replacing the foregone revenue.
 
Under the first scenario, in which the tax rate cut is immediately implemented, Australia’s GDP would be boosted by about $11.4 billion over five years, with about 3370 permanent jobs created. Over the period, foregone tax revenue would total $800 million, meaning GDP would ultimately be improved by $10.6 billion. This equates to a net GDP gain of about $10 for every $1 in lost tax revenue.
 
For states and territories this would equate to $3.4 billion in NSW; $2.5 billion in Victoria; $2.3 billion in Queensland; $620 million in South Australia; $2 billion in Western Australia; $177 million in Tasmania; $151 million in the Northern Territory; and $232 million in the ACT.
 
“Small businesses comprise 97.7% of all Australian businesses, employ more than 5.1 million people in our communities and contribute $500 billion a year to the economy. In regional and remote Australia, areas more reliant on small businesses, they are the heartbeat of the community,” Mr Achterstraat said.
 
“This tax cut is the one policy that can provide instant respite to Australian small businesses and let them focus on what they do best – running their businesses and serving our communities.”
 
COSBOA’s economic modelling was prepared by Tulipwood Advisory Pty Ltd (Tulipwood Economics), Qaive and Bellchambers Barrett.

www.cosboa.org.au

ends

Budget’s uni and TAFE ‘investments’ get thumbs up from Chartered Accountants

BUDGET REACTION – CHARTERED ACCOUNTANTS Australia and New Zealand (CA ANZ) has endorsed the Federal Budget’s university and TAFE investments after sustained calls for major reform of the higher education sector.

CA ANZ said it was “pleased to see an additional $2.5 billion over 11 years for a new higher education funding system” which will provide more Commonwealth Supported Places and extra support for disadvantaged students.

But it flagged that this new funding system “must not impose hard caps on university enrolments”. Instead, CA ANZ said, “it should extend these Commonwealth Supported Places to all Australian higher education providers to expand student choices”. 

CA ANZ education, skills and migration policy leader Sarah Davidson welcomed the 20 percent cut to student debts, wiping $16 billion from outstanding student loans.

“We have called for a reduction to student debt for many years now,” Ms Davidson said. 

“The accounting profession has experienced declining university degree enrolments for most of the past decade, leaving a critical shortfall of accounting, audit and finance professionals that we desperately need in Australia.

“This decline in enrolments is concerning as demand for the accounting profession has never been higher, with government employment projections prepared by Victoria University forecasting the number of accounting roles will increase from 201,600 in 2024 to 234,000 by 2034.”

Ms Davidson said the Federal Budget was missing a number of measures to further support the accounting profession, including lowering the cost of accounting degrees, which is a key source of student debt, and including accounting subjects at school.

“As we head towards an election, we would like to see more visionary policies from the government that support the accounting profession,” Ms Davidson said.

“CA ANZ would also like more schools supported to offer accounting subjects, and a robust national accounting curriculum for senior secondary students.

“We are also calling for more support for international students and graduates who have the qualifications to do complex accounting work but are forced to do work below their skill level due to archaic migration rules and a lack of support to prepare them for the workplace,” Ms Davidson said.

“As accountants play a critically important role in the functioning and sustainability of global financial markets, a strong pipeline of talent for the profession is key to ensuring economic stability.

“We look forward to working with the Federal Government on the rollout of this Budget to ensure we are fully addressing the key issues facing the accounting profession.” 

www.charteredaccountantsanz.com

ends

ACS welcomes tax cuts for technology professionals, calls for more focus on AI

BUDGET REACTION – ACS, the professional association for Australia’s technology sector, has welcomed the Federal Government’s 2025 Budget which will see tax cuts to benefit thousands of professionals in the technology and computing sectors.

The tax relief measures, introduced as part of the 2025–26 Budget, will provide financial relief to IT specialists, software engineers, cybersecurity experts, and other digital professionals who ACS calls “integral to Australia’s innovation-driven economy”.

ACS chief executive officer, Josh Griggs, applauded the initiative. 

“ACS welcomes these tax cuts as a positive step towards retaining and attracting the world-class technology talent that Australia needs,” Mr Griggs said.

“As the Australian digital economy grows, ensuring ICT professionals are fairly supported financially is critical. These measures will enable tech professionals to invest more in their careers, upskill, and contribute to Australia’s growing technology sector.

“However, ACS is concerned that the nation is not positioning itself to take advantage of the major changes artificial intelligence offers to the economy,” he said.

“We would like to see greater government investment and incentives for the private sector that would see increased funding for developing skills, investing in local data centres, boosting AI sovereignty, and bolstering Australia’s cyber security readiness, particularly in the small to medium enterprise sector.”

ACS president Helen McHugh emphasised the importance of financial incentives for the tech workforce.

“Our technology industry is a cornerstone of Australia’s economic future, and these tax reforms will ensure that our skilled professionals remain competitive in an increasingly globalised workforce,” Ms McHugh said. 

“However, we encourage the government to continue investing in STEM education, diversity, digital innovation, and infrastructure to complement these tax benefits so we can reap the benefits of this era of rapid change.”

Ms McHugh said ACS remained committed to supporting Australian technology professionals and looked forward to working with the Federal Government on building policies and programs that foster digital growth and innovation.

“In addition to tax relief, we hope to develop industry initiatives that will build the nation’s capability in skills development, cybersecurity funding, and digital infrastructure investment,” she said.

ACS represents more than 47,000 technology professionals across all industries nationwide. Its members work in industry, education, government, and the community delivering the digital services that drive the nation and provide the high-skilled jobs of today and tomorrow.

ACS – originally known as the Australian Computer Society, when founded more than 50 years ago – works to grow the technology sector while making sure IT professionals act ethically, responsibly, and in keeping with the best interests of not only their employers, but the wider community. ACS has branches in every state and territory, conducts its own innovation labs and education programs and works to help all Australians be part of the nation’s highest growth sector.

www.acs.org.au 

ends

Financial services sector okays ‘no surprises’ Federal Budget

BUDGET REACTION – THE FINANCIAL Services Council (FSC) has welcomed the 2025-26 ‘no surprises’ Federal Budget which, it said, “reinforces stability and provides certainty for the financial services industry and its consumers on the eve of the federal election”.

FSC CEO Blake Briggs said, “We congratulate the Treasurer for focusing on cost-of-living challenges facing Australians, and delivering stability and certainty for the financial services industry in advance of the federal election.” 

Mr Briggs said the Budget continued a multi-year focus on improving the funds management tax regime and integrity of the superannuation system, including:

  • Measures to clarify arrangements for managed investment trusts, to ensure legitimate investors can continue to access concessional withholding tax rates in Australia; and
  • $50 million over three years to extend the Tax Integrity Program to enable the ATO to ensure timely payment of superannuation liabilities by Australian businesses.

“As one of the largest contributors to the domestic economy, this continued fine tuning of the financial services framework is welcome, however there remains significant opportunity for the next parliament to refocus on economic growth and regulatory simplification opportunities to grow the economy,” Mr Briggs said.

“The FSC has recommended policy proposals that would increase financial services exports by almost $2 billion a year and lift the sector’s productivity by $800 million a year through a combination of reducing regulatory costs, lowering fees and investing in new markets.”

Among these policies are forming a red tape razor gang responsible for slashing inefficient regulation; simplifying the breach reporting regime; providing a level playing field under the foreign investment framework; allowing for the rationalisation of legacy superannuation and managed investment products; and the introduction of a product labelling regime for sustainable and responsible investments.

www.fsc.org.au

ends

Federal Budget did not address immigration ‘oversupply’ defeating new housing targets – SPA

BUDGET REACTION – WHILE SOME Federal Budget initiatives to increase housing supply have been welcomed by Sustainable Population Australia (SPA), Labor’s move to expand eligibility for the Help To Buy scheme is not one of them. SPA claims the move will “exacerbate demand”.

SPA research points to the housing crisis not being solved until demand is reduced and SPA communications manager Michael Bayliss said the Federal Budget 2025 was not heading in the desired direction.

SPA’s position is that Australia's housing crisis is “entirely due to rapidly rising demand, with an increase of 1.6 million people over the last three years”. They say the solution is to cut Net Overseas Migration to 70,000 per year “so that construction of new dwellings and other infrastructure can keep pace”. 

Mr Bayliss said the housing crisis had been driven, for most part, by record levels of population growth, including 1.6 million over the three years to September 30, 2024 and 8.7 million – or 45 percent – since 2000.

“Since the rising costs of living and lack of available housing has pushed Australia’s total fertility rate down to 1.5 children per woman, the only way to rapidly reduce demand is to cut net overseas migration (NOM),” Mr Bayliss said.

“The latest figures from the Australian Bureau of Statistics (ABS 3101.0), reveal that Australia grew by 484,000 people in the year to 30 September 2024, of which 379,800 or 78.5 percent, resulted from NOM.”

SPA national president Peter Strachan said, “As SPA noted last week, with an average occupancy of 2.5 people per household, an extra 193,600 dwellings are required to accommodate this population growth, before meeting existing demand from homeless people forced into tent-cities.

“Yet only 158,690 new homes were commenced in Australia last year, resulting in a shortfall of 35,000 dwellings, just to deal with latent demand.

“At the very least, NOM must be cut to reduce population growth to a level such that construction of new dwellings and other infrastructure can keep pace. 

“Ultimately, however, we need to reduce NOM to its long-term average of around 70,000 per annum, in line with post-war historical levels up until 2004.”

Mr Strachan said some Budget initiatives to increase supply were welcome including: an extra $54 million to states and territories for more prefabricated and modular homes; a ban on foreign investors buying existing homes for two years from next month; and doubling incentive payments for construction apprentices.

“On the other hand, expanding eligibility for its Help to Buy scheme for first home buyers will pour petrol onto the fire of over-demand,” Mr Strachan said.

Mr Bayliss said, “If Australia can stabilise its population below 30 million by managing immigration, scarce resources of capital and labour can then be reallocated away from housing construction towards more productive areas of the economy.”

www.population.org.au

ends

Coalition super policy would hike house prices by 10% – Super Members Council

BUDGET REVIEW – A COALITION policy to direct funds from super for house deposits – reaffirmed in Opposition Leader Peter Dutton’s Budget-in-Reply speech – would raise house prices by up to 10% according to the Super Members Council.

The Super Members Council (SMC) has urged the Coalition to dump its ‘super for a house policy’. The council said withdrawing super for house deposits “has been discredited by a long list of respected economists”.

SMC CEO Misha Schubert said “a vast body of expert evidence” showed was crystal clear that early withdrawals of super for house deposits would just push up house prices further and faster – pricing more Australians out of owning their own home. 

Detailed analysis of evidence from New Zealand found after it introduced a super for house scheme, house prices took off – growing at twice the rate of those in Australia up to the market peak (in 2022) – and home ownership rates fell by 7 percentage points for Kiwis in their 30s, a key first home buyer demographic.

A study by leading housing economist, University of South Australia professor Chris Leishman, commissioned by SMC, found the Coalition policy allowing first home buyers to withdraw super for house deposits could see house prices hike by up to 10.3%.

Pouring retirement savings into house deposits would supercharge an already-inflated property market – raising capital city median prices by up to $92,500 and adding $260 a fortnight to a homebuyer’s mortgage.

 “Raiding retirement savings for house deposits would just unleash a supercharged price hike in house prices, not create more new home buyers,” Ms Schubert said.

“That would mean home buyers in future would have to pay higher repayments on bigger mortgages for longer, worsening housing affordability and cost-of-living pressures on younger Australians.

“The international literature is clear, the lived experience in New Zealand is clear, and detailed and rigorous econometric models are clear – taking super out for house deposits will just further drive-up house prices, fuel higher mortgages and debt stress in a cost-of-living crisis and push the Great Australian Dream of home ownership even further out of reach for many young Australians.

“And if people retire with less super, that will also push up age pension costs – a bill that every Australian taxpayer would pay.”

She said SMC analysis showed a 30-year-old who withdrew $35,000 from their super today could retire with about $195,000 less in today’s dollars.

Australia’s leading economists say the housing supply and affordability crisis needs to be tackled with other policies – in a recent  Economic Society of Australia survey, only one out of 49 top economists supported withdrawals of super for housing.

In a comprehensive report in 2024, independent economist Saul Eslake showed policies that allow Australians to pay more for housing just result in more expensive homes rather than a higher proportion of people owning housing. 

Table 1: Estimated upper-bound price impacts from allowing first home buyers to access super for a house.

Capital city

Median
house price

Supercharged price hike 

Median after 
price hike 

Additional mortgaged repayments 

Fortnight 

Life of loan 

Sydney 

$1,193,200 

$122,900 

$1,316,100 

$345 

$269,400 

Melbourne 

$772,300 

$79,500 

$851,800 

$223 

$174,300 

Brisbane 

$893,600 

$92,000 

$985,600 

$259 

$201,700 

Adelaide 

$819,400 

$84,400 

$903,800 

$237 

$185,000 

Perth 

$809,900 

$83,400 

$893,300 

$234 

$182,800 

Hobart 

$658,200 

$67,800 

$726,000 

$191 

$148,600 

Darwin 

$502,600 

$51,800 

$554,400 

$146 

$113,600 

Canberra 

$850,500 

$87,600 

$938,100 

$246 

$192,000 

Combined capitals 

$897,600 

$92,500 

$990,100 

$260 

$202,800 

Notes: Professor Leishman found that the policy would increase house prices by between 7.4% and 10.3%.  The above estimates are based on the upper bound of 10.3%.  Median house prices for each capital city are sourced from the CoreLogic Hedonic Home Value Index for January 2025, with prices rounded to the nearest hundred dollars. Property prices include both houses and units.  Mortgage repayments are calculated using average lending rates for new owner-occupier, principal-and-interest loans as sourced from the RBA, and assume a 30-year loan term, and holding the deposit amount constant.

Source: SMC analysis; Leishman C., 2025, The housing market effects of borrowing from superannuation; CoreLogic Hedonic Home Value Index as at 31 January 2025; RBA Lenders’ Interest Rates for January 2025.

ends

CPAs say instant asset write-off should not have become an election issue

BUDGET REVIEW – CPA AUSTRALIA has welcomed Opposition Leader Peter Dutton’s promise to make the instant asset write-off permanent – and increase the limit to $30,000 if it wins the Federal Election – but argued “this should never have become a political football”.

CPA Australia chief executive officer Chris Freeland said the Coalition’s pledge to make the instant asset write-off threshold permanent at $30,000 was the right call for small business, “but the business community should not be stuck in the middle of a political fight”.

The announcement from CPA came after the Federal Government failed to address the future of instant asset write-offs in Tuesday night’s Federal Budget.

As it stands, Mr Freeland said, the current $20,000 measure, which was passed by the Senate only this week, will expire on July 1 and revert to just $1000 for businesses with revenue up to $10 million a year. 

 “The instant asset write-off provides a vital opportunity for small businesses to invest and grow,” Mr Freeland said.

“As a temporary measure only, it has not been utilised as much as it could have. Small businesses in particular need policy certainty to make informed investment decisions, especially when they involve significant financial commitments.

“The practice of legislating this measure annually has created uncertainty and has discouraged investment at a time when many businesses are keen to take advantage of such incentives,” he said

“The instant asset write-off has been a low-hanging fruit that small businesses have been hoping to utilise – but many have resisted because of the fear that it would be taken away. Businesses cannot operate like this.

“The instant asset write-off should have been made permanent in the Federal Budget – instead the business community was left to sit and wait even longer. This shouldn’t have become a political football.” 

Mr Freeland also welcomed the Opposition’s plan to cut fuel excise in half for the 2025-26 financial year but said politicians need to move aware from short-term election sweeteners and focus on substantive long-term reforms to the tax system.

“The promise to reduce the fuel excise will be welcome news for many sole traders and businesses with high transport expenses,” he said. “Helping to cut costs in the supply chain would also have a positive flown-on effect to other small businesses and consumers.

“Whether it’s modest income tax cuts or a temporary reduction in fuel excise, both sides appear stuck in a cycle of short-termism, but we need fundamental tax reform to make a substantive difference to economic growth and prosperity in the long term.”

Mr Freeland also supported the Opposition’s pledge to cut regulation where there exists duplication, but warned against allowing first home buyers to access $50,000 from their superannuation.

“This first home buyer measure will not resolve structural housing affordability issues,” Mr Freeland said. “This is more likely to worsen the problem than solve it.”

www.cpaaustralia.com.au

 

ends

More Articles …