Small Business News

Last month, the Australian government announced plans to change tax regulations that will have a great impact on small businesses incorporated in Australia. This is causing a great deal of stress amongst business owners, especially those proprietors who have owned their own companies for many years.

There are basically two parts to these new tax regulations that will directly affect a small business’ opportunity to be financially viable in the marketplace. First, the labor unions in Australia wish to have independent contractors become unionized so all hired employees are under the same taxable umbrella. Unfortunately for small businesses, their basic business needs change so drastically and frequently that independent contractors are usually their means of finding temporary, reliable employment. In turn, this keeps the individual company’s costs down as problems with keeping people on staff is of greater financial burden to the company.

The other part of the new tax regulation is basically drenched in the government’s insatiable lust for garnering as much tax money as humanly possible. Independent contractors are not under the same taxable obligations that unionized staffers are. Again, putting all workers in the same taxable category will only stand to increase the amount of a worker’s paycheck that needs to be earmarked for the government. It is important for these independent contractors to continue to have the freedom that they do to move from job to job. Their professional and personal lives depend heavily on what types of jobs they accept and which they choose to decline. Under the new tax regulations, they would be forced to take on jobs that are not as profitable rendering their business’ solvency inconsequential.


If these new tax regulations are put into effect, a business will need to have TWO employees in order to classify themselves as a small business, which means the designation of independent contractor would no longer exist. If a contractor does 80%, or more, of their work for one particular company, the new regulations would then classify the contractor as being an employee of his customer, which means the customer would then need to withhold taxes from the contractor’s paycheck.

Small businesses are prevalent in the Australian marketplace, and they have historically enjoyed many tax breaks that have allowed them to remain profitable in the face of economic recessions. However, even the savviest business owner now has to be apprehensive as to what is on the horizon for their business interests as it relates to their tax classification.