Small and medium sized businesses across Australia have been guaranteed a tax cut within the next three years.
The assurance comes as Labor threw its support behind the federal government’s plan to deliver tax relief to companies with annual turnovers of less than $50 million, five years earlier than planned.
Under the coalition’s plan, the businesses will have their tax rate dropped to 26 per cent rate in 2020/21, then to 25 per cent the following year.
The move comes after the businesses already had their rate reduced from 30 per cent to 27.5 per cent last year.
Labor leader Bill Shorten said the opposition’s support for the further cuts – which Prime Minister Scott Morrison earlier said was a point of difference between the parties – is about giving certainty to businesses.
It’s also a chance to move on to more important debates on school and hospital funding, he said.
“This is one less issue for the nation to have to waste time arguing about,” Mr Shorten told reporters in Melbourne on Friday.
“Let’s tick this box and let’s move on.”
Mr Morrison said Australia’s small and medium businesses know that his government has their back.
“They are the businesses all across Australia, and what we’re doing for those businesses is getting their taxes down and we’re going to get their electricity prices down,” the prime minister told ABC TV on Friday.
The tax cuts will cost about $3.2 billion, and while both sides of politics now support them, they each have a different plan for footing the bill.
The government would use money it didn’t get to spend on tax cuts for bigger businesses, which were knocked back by the Senate in August.
Labor wants to pay for the cuts by delaying the introduction of its proposed Australian Investment Guarantee by 12 months.
The guarantee would give all businesses in Australia the ability to immediately deduct 20 per cent of any new eligible asset worth more than $20,000, with the balance depreciated in line with normal depreciation schedules from the first year.
The Australian Chamber of Commerce and Industry said bipartisan support for the tax plan was good for small businesses.
The government will introduce legislation for the fast-tracked cuts to parliament next week.
It had initially planned to implement further rounds of tax cuts in 2024/25 and 2025/26.