The proposed minerals resource rent tax is configured by the federal government to spread out the benefits of the Australian mining boom but collateral damage of the plan could deliver fatal blow to small business sectors, reports said.

According to Home Based Business Australia, tax overhauls attached with the Labor-introduced mining tax would lead to the dissipation of tax breaks currently enjoyed by small business owners.

As many as 400,000 small business players, who mostly operate from home, are set to be deprived of 25 percent tax incentives under the MRRT program, according to HBBA President Barbara Gabogrecan.

Envisioned by Liberal Prime Minister John Howard as a way to spur the growth of Australia's small business sector, the significant tax breaks indeed generated activities in a sector now regarded as the backbone of the national economy, Gabogrecan said.

As a form of compromise, Prime Minister Julia Gillard made it clear that in lieu of the tax incentives, small business operators can instead avail of higher-scale tax writeoffs that would entitle them to hefty incentives whenever they acquire vehicles and equipments for their operations.

For instance, the government said that under the MRRT, home-based businesses can claim $5,000 tax discounts for a vehicle purchase and another $6,500 writeoff whenever they decide to upgrade their machineries.

On top of that, small companies would tax rate cut, which according to Federal Treasurer Wayne Swan were among the benefits set to be appreciated once the MRRT takes effect.

With the tax program imposing higher mandatory contributions for superannuation that run from 9 to 12 percent, Swan said that tax breaks on super funds will become a closer reality.

The government aims to collect some $11 billon via the new mining tax over the next 10 years and that huge fund will surely fuel national growth in the form of more projects set to be undertaken by federal authorities.

"The mining tax will allow us to spread the dividends of the boom so they can make a much greater contribution to jobs, to infrastructure, to national savings and to sustainable growth across the entire economy," Swan told The Herald Sun.

But Gabogrecan argued that many of these fantastic MRRT benefits would be hardly appreciated by members of her group.

"In the smaller end of small business, very few people purchase a vehicle for their business and the company tax rate doesn't really affect them ... these people are not hugely profitable, but not on the dole ... they are struggling but struggling for themselves not an employer," Gabogrecan stressed.

By its own assessment, the Coalition said that the tax cut would significantly hit the self-employed sectors and the small businesses, segments of the economy that the opposition group said cannot be regarded as high-income earners by any reckoning.