Tax cuts for small business were pocketed, went towards new jobs, but did little to boost wages.
Economic consultancy firm AlphaBeta, commissioned by Xero, has conducted analysis of the coalition's first round of tax cuts in 2015 for small businesses with an annual turnover of less than $2 million.
The change saw the rate come down from 30 per cent to 28.5 per cent.
The study found more than half of the tax relief went towards cash holdings - such as to pay down debts - while 27 per cent lifted investment.
Nearly one-fifth was used by businesses to hire workers but only three per cent used the tax cut to raise wages.
AlphaBeta's Andrew Charlton, a former adviser to Kevin Rudd, says perhaps wage impacts take time to come through.
"But at the moment (there's) no effect," told ABC radio on Thursday.
"The result could be different for a different tax cut at a different time."
Xero also separately surveyed more than 500 small businesses, with more than a third saying they were unaware they had actually received a tax cut.
"I don't know whether that goes to how hard small business people are working and they're not focused on the policy changes or whether the message is just hard to communicate," Mr Charlton said.
"Big efforts need to be done to make sure small businesses are aware of policy changes."
The next study will look at the tax cuts for businesses with turnovers of up to $10 million down to 27.5 per cent.
The Business Council of Australia is lobbying Senate crossbenchers to agree to the government's broader company tax cuts.
Chief executive Jennifer Westacott said the report did recognise businesses invested and hired more people.
"They started to put money into wages and (Mr Charlton) says very clearly that will build over time," she told ABC radio.
Ms Westacott said their own surveys show 30 per cent of large corporations would start to pay people more if they received a tax cut.
"If 30 per cent of Australian companies pay people more that's actually a lot."
At this stage, the coalition still does not have the numbers to pass its next tax cut legislation.
Share
