Impact of Tax reform on Business

The impact of tax reforms on businesses will vary depending on the circumstance of each business. The scenario on page 10 gives an example about how tax reform impacts on businesses. The scenario also takes into account other reforms that will impact on the business sector.

Case Study

Business in a town centre office

This case contemplates a medium-sized ICT services company that employs about 60 people. The company has an ACT payroll of $5 million.

The company is more than $18,500 better off per year because of the ACT Government’s tax reforms.

The business pays professional indemnity insurance premiums (through an ACT insurance provider) of $5,870 per year and employer liability premiums of $64,530 per year (excluding duty on insurance). The company has six vehicles, and currently pays comprehensive motor vehicle insurance premiums of $8,300 per year (excluding duty on insurance).

Table 4 Medium sized ICT company

Property value 2011-12
($)
2016-17
($)
Difference
($)
Difference
(%)
Tax reform     
Property taxes and levies1     
General rates 8,325 41,589 33,264 400
Land Tax 13,360 0 -13,360 -100
Duties on insurances     
Duty on motor vehicles' insurances2 830 0 -830 -100
Duty on employer liability3 587 0 -587 -100
Duty on professional indemnity4 6,453 0 -6,453 -100
Other taxes     
Payroll tax5 239,750 205,500 -34,250 -14
FESL 3,581 7,285 3,704 103
Sum of selected taxes
and levies
272,886 254,374 -18,512 -7

1 Based upon a commercial property with a constant AUV of $933,000. This has been held constant over the years to provide a comparable basis.

2 An estimated constant premium of $8,300 for motor vehicle insurances.

3 An estimated constant premium of $5,870 for employer liability.

4 An estimated constant premium of $64,530 for professional indemnity.

5 Assumes that the company has a constant payroll of $5 million in the ACT.

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