Budget's good for small businesses
A STABILISING global economy and uplift in commodity prices over the past year supported a positive 2017-18 Federal Budget outcome for small business owners.
This year's Budget was pragmatic, addressing the sensitive sectors in health and education and adding back some $13.5 billion in failed spending cuts from previous Budgets that could not get passed in the Senate.
Treasurer Scott Morrison's speech opened with positive sentiments towards the small business sector, suggesting small business owners "have gone without to keep their businesses open”.
This was followed by, "Small business owners are out there fighting for growth in their businesses every day. They deserve our respect and support.”
As previously passed by Parliament, companies with a turnover of up to $10million now attract a lower tax rate of 27.5%. Moreover, the $10 million threshold has been legislated to be lifted to $50 million over the next two years.
This Budget reaffirmed the government's intention to extend company tax relief such that all companies will pay a 25% rate by 2026-27. The government reported this legislation would impact about 3.2 million companies that employ a total of 6.5 million Australians.
The specific measures for small business in the Budget included:
The popular $20,000 instant asset write-off has been extended for another 12 months, and the threshold lifted to $10 million in annual turnover. Such a measure helps to improve cashflow for small businesses;
The cutting of red tape was music to the ears of many small business owners. The Treasurer announced a new scheme to provide up to $300 million over two years to state and territory governments that reduced unnecessary regulatory restrictions on competition and small businesses. The government has been committed to cutting red tape since 2013, and now wants states and territories to come on board. This is to be managed via the existing National Partnership on Regulatory Reform;
There are measures to support investment in new business start-ups, but this seems to be restricted to the fintech sub-sector;
Downsizers (home owners) will be able to contribute up to $300,000 into their superannuation if they are aged 65 and have lived in their principal place of residence for 10 years.
The government's massive investment in infrastructure projects is expected to boost regional areas and small businesses in associated service sectors. While these changes aren't specific to small businesses, there are significant multiplier benefits for the broader economy in infrastructure and construction.
Finally, things to watch out for include the crack- down on the so-called "black” or cash economy, for those businesses primarily dealing with cash payments.
by Suncorp Bank senior economist Darryl Conroy