Jobs and growth are the key focus of a Budget to which business groups have responded positively.
Australian Small Business and Family Enterprise Ombudsman, former pharmacist and beyondblue CEO Kate Carnell said it’s never been a more exciting time to be an SME.
Measures outlined in the Federal Budget will give more than three million small-to-medium sized enterprises in Australia the confidence to invest their time and money in the long-term future of their business, she says.
From 1 July the small business tax rate will be lowered to 27.5% and the turnover threshold for small businesses able to access it will be increased from $2 million to $10 million.
“This means businesses with a turnover of less than $10 million will also be able to access immediate tax deductibility for asset purchases costing less than $20,000 until 30 June 2017,” said Treasurer Scott Morrison.
“This will see 870,000 businesses, employing 3.4 million Australians, have their tax rate reduced.
“The Government will also extend the unincorporated tax discount to businesses with an annual turnover of less than $5 million and will increase the discount to 8% capped at $1,000. Around 2.3 million businesses will potentially have access to this tax discount.”
Carnell says that for SMEs, certainty and the ability to confidently plan for the future is the key to success.
“The measures in the Federal Budget provide businesses with a framework to chart a way forward, and confidently make investments – in terms of money, staff, equipment and time – to grow their business,” Carnell says.
She welcomed the reduction in the small business company tax rate to 27.5% and says increasing the eligibility threshold to $10 million means tens of thousands more SMEs are now in a better position to grow and to employ.
“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%,” she says.
“For SMEs, tax savings don’t go in their back pocket.
“Instead, mum and dad business owners reinvest this money into their enterprise; they buy more equipment, they hire more staff, and as big businesses continue to down-size and out-source, it’s the SMEs that are creating the new jobs, especially for the younger generation.”
Carnell says raising the threshold for the instant asset write-off for all small businesses will ensure that from 1 July 2016, an additional 100,000 business owners can confidently purchase or upgrade assets that will allow them to grow and to innovate well into the future.
She says the Budget measures aimed at streamlining red tape compliance will free up time for SMEs to focus on their core business.
The Business Council of Australia also welcomed the Budget.
“The best way to boost growth now is giving businesses greater capacity to invest in more productive enterprises, and giving workers a better reward for their effort,” says Business Council Chief Executive Jennifer Westacott.
“By acting now to carefully move towards more competitive business taxes and making inroads on bracket creep on individuals the government has given the economy a much needed shot in the arm.
“The government has also laid the groundwork for long term growth with a major investment in productivity-boosting infrastructure and measures to improve education outcomes,” she says.