Business stakeholders have welcomed some of the tax measures in the 2017 Budget, but have concerns about others
The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Kate Carnell has welcomed the extension of the $20,000 instant asset write-off scheme announced in the Budget.
A former pharmacist, Carnell also welcomed moves to hold banks to account and provide better access to justice for small business.
She said the extension of the $20,000 instant asset write-off scheme from 1 July this year is a positive move for small businesses, which are defined as having a turnover of up to $10 million a year.
The instant asset write-off program allows small business to immediately deduct assets costing less than $20,000 instead of claiming deductions over a number of years. It is on a per asset basis allowing multiple claims for assets costing less than $20,000 to be deducted.
Ms Carnell said: “We would have liked a lift in the $20,000 threshold for the instant asset write-off because for some industries, like farming, the $20,000 threshold is too low to enable them to purchase equipment.”
She said there were other Budget announcements that would result in greater accountability and transparency for banks’ dealings with small businesses.
The Pharmacy Guild also applauded these measures.
Extending the write-off will deliver immediate and tangible benefits to Australia’s 5,600 community pharmacy small businesses, said Guild national president George Tambassis.
“It will improve cash flow for small business including pharmacies, helping them to reinvest in their business and replace or upgrade their assets.”
The Guild has been working with the Minister for Small Business, Michael McCormack, to have the deductibility measure extended.
The Guild has also welcomed the cut to the small business tax rate to 27.5% which it says will benefit all pharmacies with turnovers up to $10 million a year. The median community pharmacy turnover is around $3 million a year.
Many community pharmacies are unincorporated, and for these small businesses with turnover up to $5 million, the tax discount on unincorporated business income will be raised from 5% to 8% with a cap of $1,000 per individual.
This helps to ensure that these unincorporated small businesses do not miss out on the benefits of the small business tax cuts, the Guild says.
Mr Tambassis said: “These tax changes will be welcomed by community pharmacies in a difficult trading environment.”
Ms Carnell welcomed the Government lifting the threshold for small business loans and recommends that it be set at $5 million for financial services external dispute resolution to bring it into line with ASBFEO’s definition of a small business loan – significantly higher than the banks’ limited definition of loans of up to $3 million.
But she said that there was disappointment that the Government had not taken the opportunity to set an example with faster payment times to suppliers by adopting a 15 business day payment time, requiring head contractors to adopt the payment time through its supply chains, because it would have a significant impact on cash flow and it has been shown to be beneficial overseas.
She said she will continue the call for a National Payment Transparency Register to independently monitor payment terms and practices, following the ASBFEO’s recent Inquiry into Payment Times and Practices, which found widespread evidence of small business being squeezed by multinationals’ extended and late payment practices.
“We will continue to push on this and talk further with the Government on the benefits of businesses gaining the economic benefits of being paid faster which frees-up cash flow and stimulates jobs, investment and growth.”
Ms Carnell also welcomed other measures that would require banks to be more accountable and transparent in their dealings with small business and open up competition in alternative sources of finance.
The Australian Retailers’ Association said it believes the Budget will bring some relief for retailers through reducing Government debt, but “at the undesirable cost” of increasing taxes on individuals and businesses.
It took particular aim at the Medicare levy increase of 0.5%, suggesting this may affect consumer spending.
“A tax, is a tax, is a tax, however you dress it up,” Mr Zimmerman said.
“The Medicare levy increase of 0.5 percent to fund the NDIS is just a tax hike in another form that will hit consumer pockets hard.”
While the ARA supported the extension of the $20,000 write-off and the continued Small Business Information Campaign, it was “disappointed” in the delay to the reduction of the low value threshold and the restricted application of the asset write-off scheme which excludes businesses beyond $10 million turnover.
Software supplier MYOB said the Government needed to make the $20,000 write-off a permanent fixture.
“A recent MYOB SME Snapshot survey found 60% of SMEs considered it to be the most pressing need for small business in this Budget.”