The Council of Small Business Organisations Australia (COSBOA) is urging the Government to retain the tax deductibility of interest charges imposed by the Australian Tax Office (ATO) onto small business.
Luke Achterstraat, CEO of COSBOA, said removing the deductibility of the GIC (general interest charge) and SIC (shortfall interest charge) from 1 July 2025 was a punitive and radical departure from current practice that would impact small business the most.
“The overwhelming majority of small businesses are doing the right thing and seek to pay their tax on time and pay it correctly.”
“Targeted measures to deal with high-debt accounts would be more appropriate and equitable to encourage voluntary compliance across the tax system.”
“Introducing a blanket policy of higher costs is indiscriminate, punitive and undermines the cash flow of small businesses grappling with tough operating conditions.”
Achterstraat noted that many small businesses were frustrated in their tax dealings.
“Last year over one million calls to the ATO went unanswered, many of which came from time-poor and anxious small businesses trying to navigate a complex system.”
“The Government should prioritise better service delivery and engagement with small business users before treating them with contempt.”
Achterstraat echoed concerns raised by CPA Australia that the proposed non-deductibility of GIC would effectively raise the penalty rate by 25 per cent and up to 47 per cent for sole traders depending on the marginal tax rate.
“By making these interest costs on tax debts non-deductible, the proposal risks the ballooning of tax liabilities of small businesses to unsustainable levels, potentially threatening their viability.”
Achterstraat also agreed with CPA Australia that the goalposts were being moved.
“The ATO’s past sentiments to delay tax payments during the pandemic may not have been taken on by small business owners if they knew the GIC would later become non-deductible.”
“Is this really about repaying outstanding tax debt, or just a penalty on taxpayers struggling to do the right thing and meet their obligations?”
“The ATO risks biting the hand that feeds it if this policy is blindly pursued.”
For more information, visit www.cosboa.org.au
-ENDS-
For media enquiries or interviews, please contact Luke Achterstraat, Chief Executive Officer, COSBOA on ceo@cosboa.org.au or call +61 (0) 433 644 097.
About COSBOA
Established in 1979, The Council of Small Business Organisations Australia (COSBOA) is a member based not-for-profit organisation exclusively representing the interests of small businesses. The capability, representation, and reach of COSBOA are defined by a mix of over 50 national and state-based members. COSBOA's strength is its capacity to harness its members' views and advance consensus across policy areas common to many.
Our member organisations work with the COSBOA team to assist us with policy development and guide our advocacy - not just for small businesses but also for the benefit of the Australians they employ. In this capacity, COSBOA makes submissions and representations to the government, including its agencies, on issues affecting small businesses and to pursue good policy.
For more information, visit www.cosboa.org.au
Comments