All Things Being Equal: Small Business Structure Choice
12(1) Journal of Australasian Tax Teachers Association 136-165 (2017)
30 Pages Posted: 22 Dec 2017
Date Written: December 18, 2017
In Australia there have been arguments about introducing new methodologies to tax small businesses. Recently Pitcher Partners submitted that a dual income tax (DIT) system should be introduced to achieve greater tax neutrality and to reduce complexity. However, what are the factors taken into account when a business structure is chosen for a small business, and how do these relate to the features of a DIT system? This article reports a pilot study that considered the factors for business structure choice, and whether a DIT system could provide such characteristics. It will be argued that for a DIT model to be successful in Australia it needs to address the taxation of retained business income and how it could apply to all business structures, including trusts.
Keywords: dual income tax, business structure, choice, small business, tax reform, Australia
JEL Classification: K34, H25, H21
Suggested Citation: Suggested Citation