How will tax reform affect your cash flow in 2016?

Planning ahead by outsourcing credit management could help your business grow.

Planning ahead by outsourcing credit management could help your business grow.

The Australian government released its Tax Discussion Paper on March 30, with some surprising insights that will affect the way business is conducted in the future. Company tax, at it's relatively high 30 per cent rate, has been identified along with the conveyancing stamp duty as one of the more inefficient taxes that needs addressing in potential reforms.

It was noted by the government that modelling conducted by the Treasury that company tax has a high long-term cost on living standards. While corporate tax as a percentage of total tax has remained relatively stable in the OECD since the 1980s, Australia's has risen steeply.

The paper suggests that while Australia's taxation system has not changed much in recent decades, economic variables have - meaning we are falling behind the times as a country. This creates an inefficient revenue collection system for the government that could be burdening the country as whole.

With the government putting everything on the table for discussion, including company tax, GST and stamp duty, it is expected that there could be major reform for the corporate world in the next few years. As an experienced debt collection agency, we know that changing economic factors can lead to some business instability in the short term, even if the long term benefits are worth it.

However, this can mean that unprepared businesses get caught with their cash flow down. Changes to the tax system could affect the volume that Australian businesses trade in, or introduce more complex considerations that render a company's finances and credit management systems unable to deal with a new commercial reality.

Forward thinking businesses would do well to consider outsourcing their debt collection and credit services to a company that specialises in these areas. When the world of corporate finance and tax becomes more complex, it's good to have someone on your side who knows the ropes.

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