Economic Reforms for SMEs | Tax & Red Tape Changes Ahead

Australia’s productivity challenge isn’t new, but the Productivity Commission (PC) has put forward some bold ideas to help create a more dynamic and resilient economy.

In its latest interim report, the PC explores two key areas that could shift the landscape for business owners:

• Corporate tax reform designed to spur investment
• Reducing the burden of red tape and compliance

While these are still draft recommendations, they provide useful insight into the direction of economic reform - and the potential impacts on small and medium-sized businesses. Let’s break it down.

Corporate Tax Reform – What’s on the Table?

Business investment in Australia has slipped over the past decade, and the PC argues our corporate tax system needs a reset. Their suggestion is to move toward a more efficient mix of taxes that encourages investment while still maintaining revenue.

Two major changes are under discussion:

1. Lower company tax rate for smaller businesses - Firms earning under $1 billion could see their tax rate drop to 20% (down from the current 25–30%), while larger corporations would continue at 30%.
2. Introduction of a new net cash flow tax - A proposed 5% tax applied to company profits. Under this model, businesses would be able to fully deduct capital expenditure in the year it’s incurred, making investment more attractive and reducing long-term tax complexity.

For small and medium businesses, this could mean more breathing space to reinvest in growth, staffing, and innovation. But it’s worth noting the plan could increase the tax burden on the very largest companies earning above $1 billion.

Cutting Down on Red Tape

If you’ve ever felt weighed down by compliance, you’re not imagining things. The report highlights how businesses are spending more time on regulatory requirements - with some approvals dragging on for years.

Examples cited include:

• Windfarm approvals in NSW taking up to nine years.
• Opening a café in Brisbane requiring 31 separate regulatory steps.

The PC’s draft recommendations suggest some practical changes:

• A whole-of-government commitment to regulation that actively supports growth and dynamism.
• Tougher scrutiny of regulation to ensure it doesn’t hold back competition or innovation.
• Stronger accountability for public servants, with clearer expectations around delivering efficiency and enabling business success.

For small business owners, this push to cut red tape could mean faster approvals, fewer hoops to jump through, and more time spent building the business instead of filling out forms.

What This Means for Small and Medium Business Owners

These reforms are still just proposals - and there’s a long road before anything is implemented. But they highlight the areas where change may be coming:

• Taxation: A more flexible system that rewards reinvestment and growth could free up cash flow and make planning easier.
• Compliance: Streamlined regulation could cut down the cost (and time) of doing business, helping owners focus on customers and staff instead of red tape.

For now, business owners should watch these developments closely. Even small shifts in tax policy or compliance requirements can have a big impact on cash flow management, forecasting, and long-term strategy.

Why Staying Ahead Matters

It’s easy to assume these types of reforms won’t touch your business until much later. But here’s the reality:

• Cash flow taxes or corporate rate changes could alter how you plan investments, structure deals, or handle deductions.
• Compliance reform could reduce the resources you currently dedicate to red tape - giving you back valuable time and cash.
• Economic shifts often flow downstream, shaping lending, investor confidence, and business confidence.

That’s why it pays to keep your financial systems in order - solid bookkeeping, regular forecasting, and a clear cash flow plan put you in the best position to adapt when policy changes come into effect.

Final Thoughts

The Productivity Commission’s interim report doesn’t provide certainty, but it does signal that government is actively looking at how to encourage investment and cut unnecessary barriers to doing business.

For Australian business owners, this is a reminder of two things:

1. Cash flow is still king - tax shifts may help, but clear visibility of your numbers remains the strongest tool for building resilience.
2. Compliance isn’t going away - but smarter processes and accountant-led support can reduce the stress and keep you ahead of deadlines.

Talk to Us About Business Clarity

At Trekk Advisory, we work with business owners who are juggling compliance, tax, and the day-to-day demands of growth. Whether reforms move quickly or slowly, we’ll help you plan ahead with clarity and confidence.

Talk to our business advisor today about getting your cash flow, forecasting, and compliance in order - so you’re ready for whatever comes next.