Employment-Related Taxes The Biggest Burden For Australian Businesses

Privately held businesses in Australia are straining against multiple employment taxes, according to the final Grant Thornton International Business report of 2008.

Almost a third (29%) of business owners rank employment-related taxes as the greatest burden on their business, followed by taxes on business profits (18%) and personal income tax (17%).

Companies in many states - including South Australia, Western Australia and New South Wales - believe that staff-related taxes are twice as excessive as corporate taxes, illustrating the strength of feeling around the volume and complexity of employment taxation in Australia.

Peter Godber, National Head of Taxation Services at Grant Thornton, commented: "The cost of employment for businesses in Australia is unreasonably high, and there's a real need to streamline the system to lighten the load on Australia's entrepreneurs and incentivise employers."

"You would expect that business owners would be most concerned about taxes directly imposed on them: paying once on their company profits and again on the dividends they receive as an individual. However, this research shows that they're more concerned by their multiple exposure to employment taxes, from paying the state for employing someone, right through to dealing with ambiguous areas like fringe benefits."

Grant Thornton surveyed 7,800 international business owners across 34 economies on which aspects of taxation they saw as the greatest constraint on their business. Australian respondents put a higher emphasis on employment-related taxes than many of their international counterparts.

Whilst global respondents were equally downbeat about employment taxes and business profits (each taxation area receiving 24% of votes), Australian companies reserved their firepower for payments like payroll tax, workers' comp and employment on-costs.

The focus rose from a national average of 29% to as much as 42% in Western Australia and 38% in South Australia. Victoria was the only state to place equal emphasis on staff-related taxes, and personal income tax.

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First published: 6 October 2008.
Last updated: 6 October 2008.