The Federal Government is being urged to cut the company tax rate for small business in a bid to boost economic growth, by the Institute of Public Accountants (IPA).
IPA chief executive, Andrew Conway, said the Government had "made steps in the right direction" in its 2015 Budget, he called on Treasury to look at tax systems adopted in other Organisation for Economic Co-operation and Development (OECD) nations.
"A two-tier tax system is not as bizarre as some organisations have touted but can be quite the opposite in delivering a more efficient tax regime which is fairer for small business," he said.
"A lower tax regime for small business is already part of the corporate tax regime in a number of OECD countries including Canada, France and Japan.
"Whilst differential rates of taxation may add some limited degree of complexity, it is more than offset by the benefits gained by small businesses being able to reinvest cash flow savings from lower taxes to sustain their growth.
"The 2015 Federal budget made steps in the right direction with a 1.5 per cent corporate tax cut for incorporated small businesses. Unincorporated small businesses also receive a tax discount of five per cent up to a cap of $1,000.
"Small business is still defined as using the existing $2 million turnover test which has not been indexed since it was introduced in 2007. If this had been indexed it would now be $3 million.
"The IPA has long advocated for a concessional income tax rate for small businesses to compensate for the regressive nature of compliance costs on such entities.