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Signs promising for small business

By  Stephen Sealey

Small business is expecting Good News from this year’s Federal Budget. Stephen Sealey looks at some of the things they can expect to see.

Australia’s two million plus small business owners are hoping the Federal Budget will deliver a raft of good news on top of the recent reduction to 27.5 percent in their company tax rate.

While commentators have been surprised at the lack of usual pre-budget leaks, several possible measures likely to affect small business have already been identified. These include:

  • Confirmation of a 10-year plan to reduce the corporate tax rate to 25 percent for all companies
  • A possible extension of the highly popular $20,000 instant asset write-off scheme
  • Measures to crack down on the “black economy” where businesses use cash payments to evade tax
  • A campaign to assist small businesses to get paid on time, particularly by larger companies and government organisations
  • Incentives to encourage new small business start-ups and foster innovation

Other general Budget themes are also likely to have spin-off benefits for businesses of all sizes, such as new infrastructure spending programs, measures to boost economic activity in regional areas, action on housing affordability to stimulate construction, assistance with training Australians for jobs previously filled via 457 visas, and financial reforms to reduce red tape.

In March, Treasurer Scott Morrison secured 11th hour Senate support for a cut in the tax rate this year from 30 percent to 27.5 percent for companies with a turnover of up to $10 million.

The legislation means 3.2 million Australian companies, employing around 6.5 million people, will pay less tax.

The Budget will include a commitment to re-introduce remaining elements of the Federal Government’s corporate tax reform agenda, which would see a 25 percent tax rate for all companies by 2026-27.

“All types of businesses will benefit from these changes, including 2.3 million unincorporated businesses,” Mr Morrison said. “But the job is not over – we remain committed to delivering our full plan for economic growth and employment.”

While the initial tax cut was welcomed by leading industry and professional groups, most are still pushing for new measures and the continuation of current tax breaks and other reforms to support the nation’s small businesses.

Chief among these is an extension of the $20,000 instant tax write-off for assets, which has triggered new investment by hundreds of thousands of small businesses since it was announced in the May 2015 Budget.

A trial of simpler Business Activity Statements (BAS) was announced in the 2016 Budget and is due to be rolled out from 1 July this year. The simpler BAS means businesses with turnover of less than $2 million only have to report GST on sales, GST on purchases and total sales.

Simpler BAS is designed to reduce the time and cost involved in small business GST record keeping and reporting.

The Institute of Public Accountants (IPA) has called on the Government to continue to process of simplification for small business with the adoption of a simpler business structure to eliminate the need for trusts.

“A simplified small business entity regime which combines the attributes of companies, trusts and partnerships could significantly reduce regulations and red tape for small business,” the IPA said.

With the 2017 Budget night fast approaching, the extent to which the nation’s army of hard-working small owners will benefit will soon be revealed.