The AADA urges all Parliamentarians to support the proposed changes to Company Tax contained in the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill that is currently before the Parliament.
The Government’s Enterprise Tax Plan is to progressively reduce the corporate tax rate from 30 per cent to 25 per cent for all entities. For companies with an aggregated turnover threshold of $50 million the corporate tax rate is reduced to 27.5 per cent in 2018-19 progressively reducing to 25 per cent in 2026-27.
A more competitive corporate tax rate will encourage investment, enhance productivity, increase the level of economic activity and over time increase real wages and living standards. The economic impact of the new vehicle retailing sector in Australia is significant and the total turnover/sales amounts to over $54 billion and the estimated total economic contribution is over $12 billion.
On 1 September 2016, the Government introduced Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016 that proposed to reduce the corporate tax rate for corporate entities that are carrying on a business and have an aggregated turnover of less than $25 million for the 2017-18 income year and less than $50 million for the 2018-19 income year (the threshold test) – known as base rate entities. This Bill received Royal Assent on 19 May 2017.
The motor vehicle dealership business is characterised by high turnovers, low profit margins and large volumes of high value stock subject to floor plan finance. The high turnover means the lower corporate tax rate will not apply to many dealership businesses unless the threshold test is removed.
The Government’s Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017 introduced into the Parliament on 11 May 2017 will progressively extend the lower corporate tax rate to all corporate entities. Passage of the Bill will require bi-partisan and cross bench support.
Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill is currently before the Parliament.