The federal budget, unveiled by Treasurer Scott Morrison yesterday, includes positive measures for small to medium enterprises (SMEs).
These include a reduction in the small business company tax rate to 27.5 per cent, and an increase in the eligibility threshold to $10 million.
“For more than 800,000 SMEs, these measures translate into two tax cuts in as many years, while a further 60,000 will see an instant tax reduction of 2.5 per cent,” says Australian Small Business and Family Enterprise Ombudsman, Kate Carnell.
Executive director of the Australian Retailers Association (ARA), Russell Zimmerman, says his organisation commends the government for supporting consumer and business confidence in the current uncertain, pre-election environment.
“Introducing new measures to support business and delivering stimulus to the hip pocket on top of the RBA interest rate cut will be just what the doctor ordered for retail,” he says.
“The retail sector has seen a slow start to the calendar year with a lack of confidence triggered by the global environment and the pending federal election.”
In his budget speech, Morrison made a point of stating the importance of SMEs to the Australian economy.
“Small and medium businesses are driving jobs growth in Australia and must continue to do so,” he said. “They are overwhelmingly Australian owned and more likely to reinvest their earnings in future growth, as they seek to build their businesses.”
Other helpful budget measures include an attempt to streamline red tape compliance, allowing retailers to focus on growing their businesses rather than completing reams of paperwork.
“As I travel around the country listening to small business owners, the most common complaints are problems around red tape,” says Carnell.
“Small businesses are in the business of growing, not doing the government’s paperwork, so by simplifying Business Activity Statement reporting requirements, and committing to exploring ‘eInvoicing’ opportunities, the government is helping small business become more efficient in their day-to-day operations.”
So, what does this budget mean for you?
Lower tax rate: from July, the small business company tax rate will be reduced from 30 per cent to 27.5 per cent. It will also be made available to all companies with an annual turnover of less than $10 million.
Tax concessions: the government is increasing access to a range of small business tax concessions, again for businesses with an annual turnover of less than $10 million.
Rewards for hiring young people: as part of the Youth Employment Package, you could be eligible for a cash bonus if you hire young job seekers or offer internships. This is designed to help maximise the chances of job seekers under 25 getting a job.
Simplified Business Activity Statement (BAS) reporting: from 1 July 2017, all small businesses with less than $10 million annual turnover will be able to easily classify transactions, and prepare and lodge their BAS. A trial of this will begin in July this year.
Instant asset write-off: you can claim an immediate deduction for each and every asset purchase costing less than $20,000 until 30 June 2017. This is currently available to businesses with an annual turnover of up to $2 million a year, but will increase to $10 million from July this year.
Tax discount for unincorporated businesses: businesses turning over less than $5 million will qualify for an 8 per cent tax discount from the start of July, up from 5 per cent last year. It will continue to be capped at $1,000.
By Ruth Cooper
