On Wednesday, 11 June 2008, Minister for Small Business Dr. Craig Emerson announced that the government will consider two new measures to simplify small business taxation and reduce small business compliance costs.  
 
One of the measures is the Entity flow-through (EFT) taxation regime developed jointly by the Institute and Deloitte. The EFT proposal, which was submitted to government in April, has been referred to the review of Australia’s Future Tax System, headed by Treasury Secretary Ken Henry.  
 
The other measure is the Business Activity Statement (BAS) easy option for simplifying GST bookkeeping for small business. This measure has been referred to the Board of Taxation to consider as part of the Board’s overall review of the legal framework for the GST (refer to edition 16 of the Tax Bulletin).  
 
Background: 
The Institute has long advocated for the simplification of tax laws and easing of the compliance burden particularly for small and medium enterprises (SMEs). At the end of April, the Institute and Deloitte produced a joint proposal to generate debate on solutions to complexity and compliance costs associated with the current tax systems for SMEs. 
 
The EFT regime treats small and medium enterprises as partnerships, that is, ignores the operating entity and taxes the profits in the hands of the owners of the business. The regime is proposed as an option for small companies and unit trusts with five or fewer shareholders wanting to reduce their compliance costs. For more information on the proposed EFT taxation regime, visit the Institute’s website Entity Flow-Through Submission.  
 
Relevant links:

• The Institute: Entity Flow-Through Submission
• Deloitte: Listen to a podcast with the Institute’s Tax Counsel, Ali Noroozi, and Deloitte Tax Partner Alex Kokkinos.
• Australian government: Innovation Minister’s media release