The Great Tax Divide

why small business and average Australians deserve better

When I think about the clients we work with every day—small business owners, family operators, and hardworking Australians—it’s impossible not to feel frustrated by the sheer inequity in how tax burdens are distributed. It’s no secret that small businesses and individuals are disproportionately targeted when it comes to tax compliance and collection, while many big corporations seem to slip through the cracks with minimal accountability.

What got me started? This clip…

And, this video

But it has been brewing for a while… Remember when the government introduced the GST and promised it would simplify everything? And don’t even get me started on capital gains tax—what started as a “fairness” measure has grown into one of the most complex parts of our tax system.

The Unfair Reality

In the 2022-23 financial year, the ATO's Corporate Tax Transparency report revealed that over 31% of large corporations paid no income tax, despite collectively raking in billions of dollars in revenue. Meanwhile, small businesses and average income earners are relentlessly pursued for far smaller amounts.

We’ve seen it first-hand. One of our clients recently faced repeated ATO debt recovery notices over a $1,200 overdue tax debt—a genuine oversight, not intentional avoidance. Compare that to multinational corporations exploiting loopholes to shift billions of dollars offshore and pay next to nothing in tax. Where’s the justice in that?

Big Business, Big Benefits

Large corporations not only avoid paying their fair share of tax but also benefit from government subsidies, concessions, and grants. Meanwhile, small businesses are hit with every rising cost:

• Wage increases mandated without corresponding support for business owners.

• Electricity price hikes, leaving businesses struggling to keep the lights on.

• Compliance costs, from payroll software upgrades to superannuation reporting, disproportionately impacting smaller operators.

Big business may contribute to GDP, but it’s the small businesses—the café owners, the tradies, the local shops—that form the backbone of our economy. Yet they bear the brunt of rising costs and stricter regulations, all while fighting to stay afloat.

ATO Force vs. Fairness

The ATO estimates a 12.6% tax gap for small businesses, meaning roughly $11 billion in taxes go unpaid annually. Yet instead of offering guidance or support, they unleash aggressive debt collection tactics on businesses already doing it tough.

Multinational corporations, on the other hand, often get away with paying minimal tax because they can afford teams of accountants and lawyers to exploit loopholes. It’s galling to think about how much effort goes into chasing the little guy while the big players avoid scrutiny.

What Needs to Change

It’s time for a fairer system—one that holds big business to account and supports small businesses rather than punishing them. Here’s what I believe we need:

1. Transparent Tax Practices: Multinational corporations should be required to publicly disclose their tax contributions, as recently legislated in some countries.

2. Support for Small Businesses: The government should provide more subsidies or tax breaks to help small businesses manage rising costs.

3. Balanced ATO Priorities: The ATO needs to shift its focus to recovering unpaid taxes from large corporations rather than targeting smaller operators for minor debts.

What Can We Do?

As we move forward, it’s clear that the system isn’t balanced. This isn’t just about numbers—it’s about fairness. Small businesses and everyday Australians shouldn’t be punished for doing their best to comply while massive corporations manipulate the system to avoid paying their share.

With this being an election year, it’s the perfect time to reflect on these issues and consider how they impact us all. What kind of tax system do we want for the future? One that truly supports the backbone of our economy—small businesses and hardworking Australians—or one that continues to favour the big players at our expense?

I will say that amid the complexities and inequities of the tax system, one thing you can control is your own tax position. Tax planning is essential to ensure you’re taking advantage of every opportunity to minimise your tax liabilities and maximise your financial outcomes. And as we move into the second half of the financial year, it is the best time to consider a tax planning strategy for 2025. You can book in here if you want to know more.

Rant over.

Mel