2017/18 Federal Budget: positive result for SMEs
11 May 2017
Attributed to Darryl Conroy, Suncorp Senior Economist
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 toward 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 $10 million 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 approximately 3.2 million companies, which employ approximately 6.5 million Australians.
The specific measures for small business in the 2017/18 Federal 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 want the states and territories to come on board. This scheme 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; and
- 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. Admittedly, while these changes aren’t specific to small businesses, infrastructure and construction carry significant multiplier benefits for the broader economy.
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.
About Suncorp: Suncorp Group includes leading general insurance, banking, life insurance and superannuation brands in Australia and New Zealand. The Group has 14,500 employees and relationships with nine million customers. Suncorp Group Limited is a Top 20 ASX-listed company with $94 billion in assets. Suncorp Bank is Australia’s leading regional bank servicing more than one million personal, SME and agribusiness customers.