Most successful small businesses do not have to borrow.
If you have a successful business then one would assume that it makes enough money to finance itself. Mine certainly does.
Personal wages drawn over 35K p/a will attract more than 30% tax (company tax rate).
So, logically, like Kerry Packer, god rest him, many successful small business owners cap their salary at $35K and accumulate profits other than super contributions within the company.
Those who decide to highly gear their company are similar to those who privately live in debt and there is no law against it. Interest on borrowings is 100% tax deductable and a normal business cost. And obviously in the risk/reward equation for small business, reward wins. Just look at the number of successful small businesses.
There is a reasonable argument that the 40% taxpayer guarantee should not apply to small business because it would encourage abnormal risk taking by capping the loss at 60%.As such the current RSPT model is not suitable for small business.
Perhaps you have a reasonable arguement why a self financed small company should be allowed at least 10% tax discount vis-a-vis that of owner. Emotive responses are interesting but not something on which to base tax policy.
I have not heard a good solid arguement yet which inicates that, if the PRRT is acceptable then why should the RSPT not also be acceptable. I imagine that those vehemently against the Resources Super Profit Tax ought to be also against the Petroleum Resource Rent Tax for the same reasons. I note with interest that BHP pays the PRRT without a whimper.
If we ever want a fair and consistant tax regime then surely personal and company tax has to be harmonised in the long term interest of fairness and equity.
Wouldn't it be nice if Australian company dividends were fully franked period rather than franked to 30% and how convenient would that be for workers earning more than $35K with a modest share portfolio.
The personal tax regime is a proper dogs dinner and it is about time that a fair personal tax system is instituted where the only variable is the tax free treshold. We have that already with company tax but it seems that Dr Henry wants company tax to be based on the complicated personal tax system rather than the other way around.
