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Start Me Up!

By  Stephen Sealey

There’s a growing demand for investment in innovation and new projects. Stephen Sealey reports on how the Budget might be able to help.

Federal Government measures to support and encourage small business start-ups have been commonplace in previous Budgets and many are looking to Treasurer Scott Morrison to deliver again in 2017.

Starting their own small business is a dream for many Australians and those who succeed make a massive collective contribution to our economy and prosperity.

Recent Australian Bureau of Statistics data shows this contribution is increasing. The total number of businesses employing between 0-4 people rose by more than 70,000 in the two years to 2016. Around 97 percent of all Australian businesses employ less than 20 people.

Leading industry groups say the May Budget must contain measures that improve the climate for start-up businesses to ensure this substantial contribution continues.

A highly sought after extension of the $20,000 instant asset write-off program would also benefit start-up or newer small businesses which have not yet made use of the popular tax concession.

Council of Small Business Australia (COSBOA) hopes to see more opportunities for investment in innovation and new projects, particularly for younger people who face more challenges raising money to start a business.

“Start-ups in Australia struggle to obtain capital to ensure their investment is viable,” COSBOA said.

“This can be achieved through the provision of assistance programs and encouraging the development of additional low-cost seed capital opportunities for innovators and entrepreneurs.”

It is well recognised that the first few years in business can often be the toughest for small companies so COSBOA also advocates for tax concessions in the initial 3-5 years of operation.

Chartered Accountants Australia and New Zealand cites research showing that small business owners who receive professional advice in the start-up phase are more successful than those that don’t.

In fact, an estimated 75 percent of people starting small businesses fail to obtain any professional advice about how to run a business.

Chartered Accountants’ 2017 budget submission calls for consideration to be given to providing new ABN holders with vouchers to undertake cashflow training with accredited accountants.

CPA Australia also agrees with the need for more support for start-up small businesses. It advocates the introduction of a more appropriate entity for start-ups.

“As part of the Government’s innovation agenda and a next step to further encourage Australia business start-ups, the Government should introduce a new simplified business entity for SMEs,” it said.

“Under the current tax laws a typical ordinary commercial family business structure involves the establishment of a corporate trustee, a discretionary trust, and defining trust beneficiaries including a corporate beneficiary.

“This type of complexity acts as a disincentive to people establishing a business in Australia. The introduction of a new entity for start-ups which provides the critical features of the current structure would potentially eliminate the need for three entities, three tax file numbers, and three GST registrations.

“Instead, the business would have one entity, one Tax File Number and one GST registration. Such a taxpayer would therefore also only lodge only one tax return and one Business Activity Statement.”