The Australian Advanced Manufacturing Council (AAMC) has applauded the government’s 10 year enterprise tax plan as a vital step in supporting Australia’s manufacturing future.
Approved in March, the company tax cut begins to roll out immediately and will see companies with an annual turnover of less $10 million pay 2.5 percent less tax at the new rate of 27.5 percent this financial year.
From July 1, companies with a turnover of up to $25 million will get the 2.5 percent reduction to 27.5 percent, with the drop applying to businesses under $50 million in FY18-19.
“In order for Australian companies to compete globally, they have to grow in scale, and they have to be right at the cutting edge of their fields. These company tax cuts are critical for manufacturing,” said Chairman of the AAMC, Mr John Pollaers.
“In global terms, we’re talking about micro businesses when we talk about even $10 million annual turnover. Lowering the corporate tax rate over time is a positive support for the ambition of many of our small businesses to become medium-sized – and even large-sized,” he said.
The changes will deliver a tax cut for around 3.2 million small and medium Australian businesses, employing over 6.5 million workers.
Small and medium Australian businesses with turnovers of less than $50 million a year will benefit, the government said in a statement.
“All types of businesses benefit from these changes, including 2.3 million unincorporated businesses,” the statement said.
Australian advanced manufacturers are achieving great things in the face of intense global competition. But the conditions are tough.
Right now, significant technological shifts are occurring in manufacturing: commercial applications for artificial intelligence and machine learning are expanding; we see robotics entering a new phase; significant advances are occurring in nanotechnology, 3D printing, genetics, biotechnology, chemistry and materials science.
In the European Union, a small business is considered one with 50 employees and an annual turnover of 10 million Euros or less (AU$15 million); in the US, a small business employs up to 500 employees.
“For advanced manufacturers seeking to become global suppliers, scale is an issue,” Mr Pollaers said.
“Their global customers must have trust in their viability in the long term. Ensuring smaller entities gain full and reasonable benefit from ATO allowances for small business simply supports their growth and continued viability into the future – and allows Australian companies to operate on a more level playing field with their overseas competitors.”