Entrepreneurship, Innovation and Small BusinessA sketch in five slides

May 2015

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Small business is the engine room of the Australian economy

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Legal structures and compliance burdens

Small businesses operate as sole traders, partnerships, trusts, companies or a

combination of these. A small business may use a complex structure, including

trusts and companies, for a number of reasons, including tax.

Small businesses tend to pay more per dollar of turnover in tax compliance costs

than larger businesses. This limits money available to grow the business.

Medium to large

Small to medium

micro0

20

40

60

80

100

Tax compliance cost (per $1000 of turnover)

Tax compliance cost (per $1000 of turnover)

Innovation: benefits and risks

Innovation comes with risk and rewards. Companies engaged in innovation are more

than twice as likely to report increases in the total number of employees, but investing

in innovation can be risky. Unless it is appropriately designed, the tax system can

further discourage risk-taking, reduce investment and stifle innovation in the economy.

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Some of the existing measures to support innovation and small business

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The Budget takes the next steps ...

Getting tax settings right for small business is an important part of getting the

right environment for small businesses to prosper.