The Australian Small Business and Family Enterprise Ombudsman has called on the federal government to defer a rise in the super guarantee (SG) and cut taxes on super payments in an effort to ease the financial pressure placed on small business as a result of the COVID-19 pandemic.
In a letter to the Treasurer, ombudsman Kate Carnell said a two-year deferral on SG increases and reducing the tax on compulsory employer SG contributions to 7.5 per cent during that time would ease some of the financial burden faced by small businesses without adversely affecting workers.
The measures would offset each other and workers would receive a similar super amount as they would have under the planned SG increase, Carnell pointed out.
“We have to get the balance right by ensuring small businesses aren’t hit with rising costs and workers are no worse off,” she said.
“Many small businesses are already struggling to stay afloat as a result of the COVID-induced recession and cannot afford to pay higher costs. These increased costs would put small business owners under even more financial strain, placing jobs and businesses at risk.
“It is equally important to safeguard the long-term financial future of Australians through superannuation.”
The tax cut would help Australians who had accessed their super early as a result of the financial impact of the COVID-19 pandemic kickstart the process of restoring their long-term super balance, she noted.
She predicted the proposed tax cut would cost the government a maximum of $6 billion a year.
“Ultimately, by implementing this proposal, the federal government would be supporting small businesses and all Australians who deserve a dignified retirement,” she added.
In June, a group representing the professional accounting and tax practitioner bodies said the government should extend the deadline for SG amnesty applications to March 2021 in light of the impact of the coronavirus pandemic.
Last week, Superology director Tracey Scotchbrook pointed out individuals receiving an SG make-up payment relating to previous years, such as those arising from the SG amnesty, were at risk of losing their unused concessional contribution caps.