Thank you, it is great to be here. I am delighted to join you for the Institute of Public Accountants' National Congress.
I join you not only as Assistant Treasurer but also as someone who founded and ran a successful small business prior to entering Parliament in November 2007.
So, I know how difficult it is - it demands risk-taking, resourcefulness and courage.
It means not paying yourself a wage for six months to meet cash flow requirements, mortgaging the family home and working long hours to get ahead.
I also know that feeling small business owners get when they meet with their accountant and leave with not only a plan but peace of mind.
So, thank you for all the work you do in supporting and advocating for Australia's small business community.
Sound economic management
Today, I am pleased to outline our Government's economic plan, centred around tax cuts, digital economy, black economy, e-inovicing and complaints.
More jobs. Guaranteeing essential services. A Government living within its means – that's our economic plan.
1.14 million jobs been created since we were first elected, illustrating that our plan that is working.
I believe our support for businesses - of all sizes - starts with strong fundamentals; our economy is growing at 3.4 per cent through the year; our AAA credit rating has been reaffirmed.
Yet the Government knows there is no room for complacency, especially given the global headwinds.
We continue to take a practical and prudent approach to managing the Budget.
And we are also pressing ahead with trade agreements with the Trans-Pacific Partnership (TPP-11) Agreement - one of the most comprehensive trade deals ever - passing Parliament.1
And there are further opportunities for small business when the Peru-Australia FTA and Indonesia-Australia Closer Economic Partnership Agreement enter into force.
The combination of our nation's highly skilled workforce, strong institutions and economic resilience makes Australia an ideal place to do business.
Tax cuts
A key part of our economic plan is lower taxes.
As you've heard the Prime Minister say, 'if you have a go - you will get a go'.
Many people in this room would've been thrilled with the Government bringing forward our corporate tax relief last month, with 3.3 million small and medium sized businesses – who employ 7 million Australians – paying less tax five years earlier.
These businesses are the backbone of our local communities.
These are the sorts of economic conditions which improve under a Coalition Government.
Not only have we delivered tax cuts, but we have successfully passed legislation to deliver them five years sooner.
From 2021-22, a business with a turnover below $50 million will have a tax rate of just 25 per cent, five years earlier than planned.
Similar timing will also apply to the roll-out of the 16 per cent tax discount for unincorporated small businesses with a turnover below $5 million.
Take Kylie for example, if she runs a café company that makes $100,000 profit, she will have an additional $1,500 in 2020-21 and $2,500 in 2021-22.
As the Treasurer said recently, this means businesses will keep more of their own money – that's money they can invest back into their business, to create jobs, to boost their productivity and grow.2
Fast-tracking the tax cuts will also give small and medium businesses - and their advisers - the certainty they need to start factoring in lower rates into business plans.
That certainty is important and it shouldn't be underestimated - it shouldn't be undermined.
Instant asset write-off
On entering Parliament, I made it clear that I am an ardent supporter of free enterprise - that hasn't changed.
I believe small businesses must be able to operate in an environment of incentive and reward for effort.
The tax cuts are one example, another is the $20,000 instant asset write-off.
First introduced in the 2015-16 Budget, we have extended the write-off for a further 12 months to 30 June 2019.
This is a win for many businesses that'll use the write-off to purchase or replace equipment or assets - improving their cash flow.
A tax system for a digitalised economy
It is timely that the Institute of Public Accountants is about to host the World Congress, as there are many challenges that have an international dimension - tax and digital economy is one of them.
As some of you know, the Government is working at both the international and domestic levels in exploring responses to the tax challenges presented by the digitalisation of the economy.
Earlier this year, we reinforced to the G20 that Australia is committed to working with the international community to ensure that digital multinationals pay their fair share of tax.
We take the view that digitalisation has provided significant benefits for Australian consumers and businesses, yet we are concerned some very profitable, highly digitalised companies pay very little tax in the countries in which they do business.
This has raised important questions about whether the current international tax system remains fit for purpose.
Last month, we issued a discussion paper on Australia's corporate tax system and the digital economy.
And we welcome your views on options to move us towards a fairer and more sustainable tax system for the digitalised economy.
This work, of course, complements the Government's strong action in recent years to prevent multinational tax avoidance and to strengthen the integrity of Australia's corporate tax system.
For example, we have already put in place a number of measures relating to the taxation of digital businesses.
This includes extending the GST to digital imports from 1 July 2017 and low value imports from 1 July 2018.
These measures mean local businesses are no longer unfairly disadvantaged by the GST exemptions foreign businesses used to enjoy when selling goods and services to Australian consumers.
The Government has introduced legislation into Parliament to extend the GST to offshore sellers of hotel accommodation in Australia.
Since January 2016, the Multinational Anti Avoidance Law (MAAL) has applied to strengthen our permanent establishment integrity rules, by preventing multinational enterprises from artificially booking Australian sales offshore.
And, the Diverted Profits Tax has applied a new 40 per cent penalty rate of tax - a deterrence - to multinational enterprises that seek to avoid tax by diverting profits offshore.
Making sure foreign investors and multinations pay their fair share of tax is part of our Government's plan for a stronger economy to guarantee the essential services that Australians rely on. Labor has only ever sought to block and delay our actions.
And I note the ATO anticipates that an additional $7 billion in sales revenue will be returned in Australia each year as a result of the MAAL.
Black economy
Our black economy measures align with the Government's broader drive to bolster integrity in the tax system.
Contrary to popular belief, the black economy is not limited to cash-in-hand tax fraud.
It goes much further than that - it is a multi-faceted problem operating across Australia's workplace relations, financial, welfare, procurement and migration systems.
In fact, the Black Economy Taskforce estimated that the black economy could be as large as 3 per cent of GDP in 2017, or approximately $50 billion a year.
The crux of the matter is that honest businesses meeting their tax and other obligations lose out to competitors doing the wrong thing.
And, if left unchecked, this encourages others to begin operating in the black economy in order to remain competitive.
The Taskforce final report was released as part of the 2018-19 Budget, and the Government is taking immediate and strong action on several fronts.
Sales suppression
For example, Parliament passed tough new laws banning software allowing businesses to understate their sales and income.
Electronic sales suppression tools allow businesses to falsify electronic point of sale records to deliberately reduce their tax liability and dodge their tax obligations.
Our new laws introduce penalties for the production, supply, possession or use of this type of software.
As a major deterrence, the penalty for producing or supplying electronic sales suppression tools is in excess of $1 million.
Taxable Payments Reporting System
At the same time, we extended the Taxable Payments Reporting System to the courier and cleaning industries.
This forms part of our response to the Taskforce's concerns that contractors in these industries are at high risk of not disclosing income.
And I recently introduced a Bill into Parliament to address further areas where black economy activities are prevalent.
The Bill extends the Taxable Payments Reporting System to the road freight transport, security providers and investigation services and information technology industries.
Tobacco
I am also pleased to report that the Government has just passed legislation to further tackle illicit tobacco.
The legislation forms part of a significant Government reform package to dismantle the black market for tobacco.
For example, the Taskforce found that
The street price of a pack of cigarettes in China and South Korea is approximately $3. That same pack sells for closer to $23 in Australia. There can be huge profits in smuggled tobacco - a single shipping container of tobacco can generate three to four million dollars profit.3
This legislation removes a key source of illicit tobacco used by criminal networks.
It will deny criminals the opportunity to source tobacco before duty has been paid on it.
The new measures not only protect law-abiding businesses but ensures that the Government's health policies cannot be undermined by criminals who seek to use the sales of illicit tobacco to fund their other activities.
ABN
As announced in the 2018-19 Budget, the Government is consulting with a range of stakeholders on strengthening and modernising the ABN system.
The Taskforce found that easy access to ABNs is facilitating fraudulent behaviour and that ABNs can provide a false appearance of legitimacy.
It is essential that the ABN system remains robust and suitable for a modern economy.
Reforms in this area will also have regard to broader reforms such as modernising business registers, implementing a digital identity framework and introducing director identification numbers.
Cash limit
As part of our efforts to curb the black economy, we also plan to implement an economy-wide cash payment limit of $10,000.
The Government believes the limit will strike the right balance.
For example, we want to disrupt black economy operators using large cash transactions to avoid their tax obligations, yet we don't want lump legitimate businesses with red tape.
We issued a consultation paper earlier this year and we are considering submissions.
Procurement
The Government is also leading by example by increasing the integrity of government procurement.
In other words, businesses wishing to tender for government procurements over $4 million will need to have a satisfactory tax record.
Review
As I said, the black economy it is a multi-faceted problem and it demands a multi-faceted response.
For example, we plan to further examine gaps in the current black economy offences and penalties regime and examine options to improve existing prosecution processes.
And consultation will soon begin on how a sharing economy reporting regime could be implemented that will ensure that those working in the gig or sharing economies are complying with their obligations.
Combined, these measures are another important step to improve compliance with tax obligations and deter businesses from engaging in the black economy.
e-Invoicing
In a similar consultative fashion, along with our New Zealand counterparts, we are seeking your views on electronic invoicing or e-Invoicing.
Deloitte Access Economics estimates that Australian businesses issue approximately 1.2 billion invoices annually, and that e-Invoicing could result in economy-wide benefits of up to $28 billion over ten years.
That's worth pursuing.
Our consultation paper is seeking your views on establishing an independent, fair and equitable governance structure for the day-to-day operation of e-Invoicing in Australia and New Zealand.
As our paper says:
'e-Invoicing is a clear opportunity to streamline business-to-business transactions, improving efficiency and reducing error handling, saving businesses time and money.'4
Something the government obviously supports.
Red tape
In fact, more generally, we want to make things easier - for accountants and small business alike - by cutting red tape.
For example, we streamlined GST reporting for around 2.7 million small businesses by reducing the number of BAS GST questions to only three and scrapping the requirement for a 20-question worksheet.
As the old adage goes 'time is money' and this change saves small businesses time so owners can get back to running their business.
When fully implemented, Simpler BAS is estimated to save each small business an average of $590 per year.
The Government has reduced the Commonwealth regulatory burden on businesses and the community to the tune of nearly $6 billion.
To encourage reform we will pay up to $300 million to states and territories that reduce regulatory burdens on small business.
We know that states and territories continue to impose a wide-range of regulatory restrictions on small business.
Agreements are already in place with New South Wales, Victoria and Western Australia.
For example, the Commonwealth is working with NSW to slash red tape by cutting the time, cost and complexity of starting up a hospitality business.
The NSW Government estimates that 'instead of waiting up to 18 months and filling out up to 48 forms, an aspiring cafe, restaurant or small bar owner can now expect to open in less than 90 days.'
Unfair contracts
I know the ACCC and the ASIC have spoken to you on many occasions about unfair contract terms.
To quickly recap, the Government passed legislation to extend the consumer unfair contract term protections to small businesses in November 2016.
The protections apply to standard form contracts that don't exceed $300,000 or $1 million for contracts longer than 12 months.
And at the time the contract is entered, at least one party to the contract must be a business that employs fewer than 20 staff.
As a result of the changes, small businesses, like consumers, are no longer vulnerable to the inclusion of unfair terms in standard form contracts.
In the latest development, the Government has given the ACCC and ASIC new investigative powers to assess whether a term in a standard form contract may be unfair.
Just last week, I announced that the Government will review the effectiveness of protections for small business against unfair contract terms.
It is a timely review as the protections are now two years old.
We want to ensure the framework is operating effectively and that appropriate levels of protection are afforded to small businesses.
As always, I invite IPA to provide its expertise to the review.
We expect to have a final report in February 2019.
Australian Financial Complaints Authority (AFCA)
Finally, I want to mention that it is a landmark day for Australia's financial dispute resolution system.
From today, consumers and small businesses can lodge complaints with the Australian Financial Complaints Authority (AFCA) - the new one-stop shop for external dispute resolution.
Following the Ramsay Review, the Government established AFCA to bolster community confidence in financial services and provide greater access to free and fast dispute resolution for all financial complaints.
Consumers and small businesses will benefit from having increased access to redress, as AFCA will have significantly higher monetary limits and compensation caps than previously available.
For example, a small business will be able to have their complaint heard where it relates to a credit facility of less than $5 million and will be eligible for compensation of up to $1 million.
This will be almost triple the existing limits of FOS and CIO.
In the case of a small business primary production dispute, AFCA will be able to award compensation of up to $2 million.
Closing Remarks
As we draw to a close, I was to reiterate one fact – our Government is backing small business to drive jobs and growth.
We recognise that a strong small business sector means more jobs for Australians and more opportunities to build vibrant local communities across the country.
In addition to our tax support for small businesses, the Government has cut red tape, and is giving help to purchase new equipment and improving access to new markets through trade agreements.
As I said earlier, I join you not only as Assistant Treasurer but also as someone who has experience running a small business.
Small business owners fight a daily battle to survive, to grow, to improve the livelihood of their families and to generate employment.
And I know what a difference it makes to have a good accountant in your corner.
Thank you for inviting me today.
1 - https://www.pm.gov.au/media/tpp-11-open-new-doors-aussie-farmers-and-businesses
2 - /ministers/josh-frydenberg-2018/media-releases/delivering-tax-relief-small-medium-sized-businesses
3 - /sites/ministers.treasury.gov.au/files/2019-05/Black-Economy-Taskforce_Final-Report.pdf p306
4 - /sites/ministers.treasury.gov.au/files/2019-05/c2018-t331468-v2-1.pdf