Mining tax passed, business community divided

by 20 Mar 2012

Mining tax passed, business community dividedThe passing of the controversial mining tax has set tongues wagging, and the super guarantee will now increase from 9% to 12%. Yet the business community is divided on whether the range of tax cuts and benefits offered by the government will be adequate to offset the 3% increase.

Peter Anderson, Chief Executive of the Australian Chamber of Commerce and Industry (ACCI), said the passage of the mining tax “hides a bitter pill for the nation’s one million employers because there will be more employers paying the levy than incorporated businesses that will qualify for a tax cut”.

“The public think the mining tax is paying for higher superannuation when truth is, one million employers and small businesses are,” he added.

Yet Pauline Vamos of the Association of Superannuation Funds of Australia (ASFA) said the mining tax is unequivocally good news for business – small, medium and large. Vamos said the increase to the superannuation guarantee (SG) will be wholly absorbed by tax exemptions and, phased in over the next seven years, will have the equivalent effect of just a 0.25% increase.

Vamos added that in wage negotiations, both employers and employees will consider the SG increase part of the wage negotiation. “The SG has been around for 11 years, and it’s been at 9% for 11 years. So it’s part of the whole structure of wage negotiation,” she said.

Tax concessions for non-mining-sector businesses will include:
 

  • an instant tax write-off for the first $5,000 of any motor vehicle purchased in the next financial year  
     
  • immediate write-off of all assets valued at under $5,000 (up from just $1,000)
     
  • a single depreciation rate of 30%. At the moment, small businesses allocate assets to two different depreciation rates: 30% and 5%. Now they can all go under 30%
     
  • medium and large non-mining sector business will also receive a cut in the company tax rate

Vamos reassured that there is a funding basis for the extra 3% and said employers have no reason to fear the SG increase.  “There is no reason at all [to worry]. SG increases have historically been much more dramatic,” she said.

- Stephanie Zillman

 

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