Ai Group endorses the call to lift the definition of an Australian small business from 15 to 25 employees for the purposes of tax, regulation and employment laws but emphasises that this needs to be part of a broader effort to tackle the minefield of regulation that employers need to navigate.
“We need to do the hard work necessary to make these bad laws better. Carving out small businesses from complex or unnecessarily burdensome regulatory requirements is only part of the solution,” Innes Willox, Chief Executive of national employer association Ai Group, said.
“Nonetheless, the current Australian approach to defining a small business is ham-fisted, unsophisticated and outdated.
“Any business with 25 employees or less is in reality still a very small business. Very often it is a family business, or a start-up. It is ludicrous that many of the current exemptions or special rules for small businesses cut out as soon as an organisation engages the 16th staff member.
“The current definition clearly discourages growth, investment and employment in businesses that have the potential to be significant contributors to their local as well as the national economy.
“In other jurisdictions, small businesses are defined both by the number of employees they engage as well as revenue thresholds. There is no such sophistication in the Australian taxation and regulatory systems which appear to be stuck in a time warp.
“We are living in a time of record business closures as a result of enormous economic pressures, including the Australian Taxation Office targeting small businesses to reclaim money allocated to business to keep them afloat during the Covid lockdowns and disruption. Regulatory overload from the federal and state governments is making it increasingly difficult for businesses of all sizes to be compliant, let alone profitable.
“Lifting the thresholds for small businesses should be a priority for our political system heading into the next election. Crucially though, raising the employment threshold to 25 employees should just be the start of the discussion on possible changes to make it easier to employ people and to address our entrenched productivity problems.
“If no change is made we will simply see more small businesses disappear from our communities and fewer Australian businesses take the risk of establishing their own business with the hope of employing fellow Australians,” Mr Willox said.
