Introduction
It is not uncommon in many of the world’s developed economies for small and medium-sized businesses to be given tax incentives. Moreover, even in most developing countries, the tendency to treat start-up entrepreneurs or small companies to help them with the initial impetus for development and further existence can be observed at present. For the same reason, an increase in entrepreneurs at this level can contribute to maintaining the stability of the economy in the country in which this business operates. Moreover, the increasing number of jobs in the entrepreneurial sector contributes to improving the general financial and social situation of any state. It is one of the easiest to control, subject to explicit legal provisions.
The essence of tax incentives is to increase the number of people willing to operate in small businesses. In doing so, they are highly dependent on the existing legal framework of the Income Tax Assessment Act. This law defines the state’s specific requirements for small businesses and determines the chances and merit of each figure receiving such benefits based on an accounting of capital gains. As one of the analysis results of the level of tax relief and the rate of development of small businesses within Australia and their response to state registration, it is possible to note the effectiveness of the IRS, with some caveats.
Literature Review
Literature regularly analyzes current legal issues and tax opportunities for small businesses. Arrays of information are updated with the consistency associated with innovations in the legal, political, and commercial spectrum. Accordingly, several systems are provided to assess the effectiveness of the current level of preferential policy, taking into account all necessary statistics and recommendations.
The most in-depth analysis requires a careful evaluation of the data in the context of the current time, taking into account recent changes and trends for future ones. Therefore, a volume of data for 2019 is chosen as the basis and analyzed by many specialists. These same reports are validated in the analysis process by officials in a parallel unit related to assessing the success of small businesses in general. This division is related to small businesses and family-owned businesses and takes into account the percentage of sphere revenues to the state budget. According to this report, not only an impressive contribution to the overall fiscal and budgetary space, but also a significant increase in employed workers and a reduction in the unemployment rate are highlighted.
Reliable and up-to-date data provided by Australian government agencies and databases contribute to the credibility of the narrative and the conclusions. Thus, any such assessment of tax deductions by small businesses is similar to processes in other developing countries. In the format of academic research, it is possible to observe a divergence of opinion regarding this question.
What refers to small business benefits? Some identify a link between such exemptions and the economic development of the whole country. Other researchers evaluate the effectiveness of the impact of new legislation on the dynamics of post-pandemic realities, which is also very relevant today. The overall effect of taxes and legislative policies affects medium, small, and even in places large enterprises in other developed countries to no lesser extent.
Additional publications on Benefits provide essential information on the potential and trends of possible changes. Thus, identifying weaknesses takes less time when analyzing the issues studied in detail. In addition to all of the above, attention is also paid to the analysis of consumers ‘ feedback. For example, Nguyen and colleagues look at tourism and other basic consumer needs in this context. In a similar format, it looks at the issue from a completely different perspective by exploring the problem of consumer influence on the very essence of the need for small businesses in the format of social media evaluation. By analyzing the statistics provided and the Australian government reports, there is an opportunity to sensibly determine the contribution of small businesses to tax benefits on par with deciding the best legislative requirements to improve it.
The Importance and Issues of Small Businesses
The participation of small businesses in the overall development of the Australian economy, as well as in the development of similarly developed countries, is difficult to ignore. This number includes the vast majority of active businesses in the country and accounts for the bulk of value-added and employment among citizens. However, the industry faces a relatively high level of operational problems, which include the resulting gains in failure and bankruptcy rates. This issue is not adequately addressed in the sources studied, which is one of the reasons for additional research and attention to the problem. Being one of the foundations of the economy, a small business faces issues that cannot be solved at the local level and demonstrates much worse results than those that should have been shown.
The importance of the sphere is easily highlighted when the percentages of small, large, and medium-sized businesses are taken into account. Despite the floating values, small businesses are the backbone of economic development and have the most outstanding representation in the state’s domestic market. Thus, the lack of work on the impact of its problems on the business decisions of similar small businesses signals the importance of researching them to correct the situation on this issue.
Small businesses account for a substantial proportion of employment in the country, which underscores the importance of concern for the development of this type of enterprise. The private non-financial sector accounts for almost half of the share of employment in domestic and foreign economic growth. The recent partial decline in this share is partly compensated by the share of jobs in medium-sized businesses and is related to the lack of benefits in the own sector. As for the agricultural sector, citizen employment in small-scale firms is absolutely in the lead. This is ensured by a large number of small businesses in the industry and is confirmed by the trim level of employment in the mining sector because of the predominance of medium and big companies in it.
The Discussion of the Small Businesses Tax Concessions
The significant concessions in the area under discussion relate to many aspects of business operations. The main factors involved are the benefits in the payment and reporting sections. Moreover, larger companies and partnerships have similar terms on par with smaller sole proprietorship companies. This overlap is not always relevant when comparing taxpayer opportunities.
The bottom line is that in some situations, the accountability of firms of different sizes is very similar. This gives momentum to the growth of medium-sized organizations and stalls small businesses due to the difference in the number of assets. This fact is still a disadvantage for many individual entrepreneurs when there is a need to develop the economy of the whole state.
An additional problem is determining one’s level in each reporting year. Firms that balance on the border of the definition of small business and do not fully transition into the average category with such an assessment are practically guaranteed bankruptcy. In addition, the parallel review of concessions aggravates the situation and does not contribute to the company’s survival in such a dangerous period for the market.
It is possible to claim benefits for small businesses even without being a subject of them. However, these conditions greatly restrict development and are incomprehensible to most entrepreneurs. Moreover, many people in business face the problem of unexpected status revision. Undoubtedly, this does not cancel their tax and economic responsibility, but more detailed information and differentiation of entrepreneurs would make more sense.
Insight and Recommendations
According to the analyzed sources, several potential changes to the tax code could be proposed, most of which relate specifically to the categorization of entrepreneurs. The penalties themselves are quite reasonable and elaborate, which allows us not to focus on them in this context. Nevertheless, the issue of determining the boundaries of the transition of small to medium-sized businesses raises questions. It is not always possible to adequately assess the targeting, payback, and prospects of a company to determine the level of assistance.
Moreover, more tax breaks for small businesses are recommended. Clear earnings boundaries for the transition from small to medium-sized businesses will become an obvious strategy for everyone. Even if the new conditions provoke an increase in the number of companies and the fragmentation of larger enterprises, the total amount of employment and movement in the economy will increase.
Additionally, it is possible to offer a reduction or exemption from penalties for some organizations that hide key figures. In wanting to take advantage of small business benefits and pretending to be a smaller company, some are losing far more benefits than they would have gained if they had contributed to the budget. Moreover, some companies have lost profits in doing so, which, in fact, may far exceed their expenditures on potential tax payments as a different-level business.
Conclusion
Thus, there is an opportunity to assess the compliance of the work with all of the given criteria and the features of the main question. Given the ambiguity and breadth of the questions asked, the desire to answer them was expressed in the format of maximum diligence. In addition to analyzing the apparent disadvantages and advantages of the current tax incentives, it was noted that a more detailed study requires much more material. However, the lack of information in the format of general statistical reports on this factor is not available online, which does not contribute to the development. Thus, on the grounds of relevance to current conditions, self-assessment of the work can be made at the maximum level.
References
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The Australian Small Business and Family Enterprise Ombudsman. “Contribution to Australian Business Numbers.” ASBFEO, 2022. Web.
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The Board of Taxation. “Review of Small Business Tax Concessions.” TaxBoard, 2019. Web.