Impacts of reforms to date stage 1 Revenue neutralityChanges in residential general rates to date for houses & unitsImpact of tax reform on householdsImpact of tax reform on businessStage 2 reforms 2017-18 - 2021-22 Commercial conveyance duties removed for most transactions from 2018-19 Residential Conveyance duties continue to reduce every year General rates increases moderated & more equitable
Impact of Tax reform on Business
The impact of tax reforms on businesses will vary depending on the circumstance of each business. The scenario on page 10 gives an example about how tax reform impacts on businesses. The scenario also takes into account other reforms that will impact on the business sector.
Case Study
Business in a town centre office
This case contemplates a medium-sized ICT services company that employs about 60 people. The company has an ACT payroll of $5 million.
The company is more than $18,500 better off per year because of the ACT Government’s tax reforms.
The business pays professional indemnity insurance premiums (through an ACT insurance provider) of $5,870 per year and employer liability premiums of $64,530 per year (excluding duty on insurance). The company has six vehicles, and currently pays comprehensive motor vehicle insurance premiums of $8,300 per year (excluding duty on insurance).
Table 4 Medium sized ICT company
| Property value |
2011-12 ($) |
2016-17 ($) |
Difference ($) |
Difference (%) |
|---|---|---|---|---|
| Tax reform | ||||
| Property taxes and levies1 | ||||
| General rates | 8,325 | 41,589 | 33,264 | 400 |
| Land Tax | 13,360 | 0 | -13,360 | -100 |
| Duties on insurances | ||||
| Duty on motor vehicles' insurances2 | 830 | 0 | -830 | -100 |
| Duty on employer liability3 | 587 | 0 | -587 | -100 |
| Duty on professional indemnity4 | 6,453 | 0 | -6,453 | -100 |
| Other taxes | ||||
| Payroll tax5 | 239,750 | 205,500 | -34,250 | -14 |
| FESL | 3,581 | 7,285 | 3,704 | 103 |
|
Sum of selected taxes and levies | 272,886 | 254,374 | -18,512 | -7 |
1 Based upon a commercial property with a constant AUV of $933,000. This has been held constant over the years to provide a comparable basis.
2 An estimated constant premium of $8,300 for motor vehicle insurances.
3 An estimated constant premium of $5,870 for employer liability.
4 An estimated constant premium of $64,530 for professional indemnity.
5 Assumes that the company has a constant payroll of $5 million in the ACT.
