The Budget: What’s in it for small business
Treasurer Wayne Swan unveiled the 2012/13 budget in Canberra overnight, returning it to surplus and detailing a number of measures he said would benefit small business. But many SMBs have been left wanting by the budget, saying it doesn’t deliver enough support to the sector.
Swan said the Labor Government was delivering a surplus on time as promised, which would fund new cost of living relief for Australian families and “help businesses invest, compete and adapt to an economy in transition.”
Swan revealed the Government’s loss carry-back tax scheme, which will allow businesses to claim losses of up to $1 million against tax they’ve paid in the two years prior. Swan said the measure will cost the Government close to $714 million and benefit businesses “that aren’t in the fast lanes” as a result of the multi-speed economy.
“This will support businesses when they need it – providing an injection of funds to invest in new ideas, equipment and markets… So a café on a tourist strip can get the funds they need to refurbish or keep on valuable staff, so they’re ready for when conditions pick up,” he said.
Swan said the Government estimates the measure will help some 110,000 businesses over the next four years, “providing cashflow when it is needed most, rather than down the track.”
Institute of Public Accountants chief executive Andrew Conway said that while this measure is a “welcome relief”, it doesn’t go far enough.
“…it doesn’t benefit profitable businesses or provide immediate relief. Unincorporated small businesses which make up over 66 percent will receive no relief,” he said
Swan also reconfirmed that from 1 July 2012, the Government would be increasing the instant asset write-off threshold to $6,500, and $5,000 for cars and utes.
“These new measures will drive investment, improve productivity, and make life easier for up to 2.7 million small businesses,” he said.
Other small business measures in the budget will see $8.3 million invested in the Australian Small Business Commissioner role, over four years, as well as $27.6 million invested in the continuation of the Small Business Advisory Service (SBAS), which was due to come to an end on 30 June.
According to the Minister for Small Business Brendan O’Connor, the program will be funded for an additional four years to enable the continued delivery of advisory and support services to small businesses. Service providers, such as Business Enterprise Centres and Registered Business Organisations, will now be invited to apply for funding through a process of competitive, merit-based rounds.
Swan also revealed the Small Business Support Line, a free service introduced by the Labor government in 2009 to assist with issues impacting the small business sector, will be extended to 2015-16.
Government dumps company tax cut
The Government has disappointed businesses by failing to use revenue from the mining tax to cut the corporate tax rate by 1 percent, as it had earlier promised to do, instead diverting the money to provide payments to low-income Australians.
“We wanted to do more for business with a company tax cut but the Opposition’s negative tactics have prevented that tax cut flowing,” Swan said.
According to the Australian Retailer’s Association, this is a disappointing move for businesses, both large and small.
“…retailers will suffer from the abandonment of an important promised tax cut from 30 percent to 29 percent and shows small to medium businesses aren’t sharing in the benefits of the mining boom.”
Small business owners react
Dynamic Business has asked readers how they feel about the budget, and it appears small business owners have been left underwhelmed by what it delivers to the sector.
“SMBs are a minority of voters, why would they want to do anything for us? What else would there be from this government? They know they are on their way out and now clutching at straws. Bring on the election,” Doug Berry said on the Dynamic Business Facebook page.
On Twitter, @mynextcareers said: “Given the importance of this sector to the economy, there is nowhere near enough support given.” She suggested the Government would be better off delivering tax breaks, access to grants for R&D and more creative financial options for struggling businesses, such as tax deferrals.
Sid Edwards, principal of leading Sydney-based accountancy firm Abby Practice, said last night’s budget reveal held no great surprises for business.
“There is little in this document for small business with the exception that there are no wholesale changes to contend with.”
“The carry back of losses is a welcome change which will help small businesses whose profits and losses change from year to year,” he added.
Good Business Consulting founder and managing director Phoebe Netto said the budget has created a measure of uncertainty, thanks to the Government’s “lack of follow through on plans, such as the promised deduction for work-related expenses that was previously scheduled to commence in 2013, and the company tax which would have greatly benefited small businesses if it had gone ahead.”
“Businesses owners will not know if they should be jumping for joy or rolling their eyes, when measures that were desired have been abandoned in exchange for an extension of the Small Business Advisory Service and the Small Business Support Line,” she added.
Netto said it remains to be seen if the $8.3 million investment in the the Australian Small Business Commissioner role will translate into a benefit for small businesses, and urges businesses to look at the fine print when considering the budget’s real impact on the sector.
“The loss carry-back tax scheme that was announced with much fanfare actually only applies to the revenue losses of companies and entities that are taxed like companies. This eliminates the majority of small businesses!”
“Another announcement worth noticing is the $195.3 million going to the ATO to assist them in cracking down even more on GST oversights, fraud and debt. There was never a better time to have a good relationship with your accountant to ensure full compliance with GST reporting,” she added.