The Federal Government has committed to more than $1 billion in tax breaks for “the cost of business expenses and depreciating assets that support digital uptake, up to $100,000 of expenditure per year” in the Budget. This measure will allow small businesses to deduct 120 per cent of digital upgrades, including laptops, portable payment devices, website improvements, and cloud-based software services.
In addition, the Budget has set aside a $550 million Skills and Training Boost that will provide an additional 20 per cent deduction on staff training expenses.
This combination of factors is reason for small-business owners to be more optimistic than before according to small-business insurance specialist Bizcover, who see the incentives potentially boosting small-business productivity and, in turn revenue growth, and also potentially helping small businesses recruit or retain staff.
The Budget coincided with the release of BizCover’s 2022 Small Business Bravery Report which reveals that small-business owners are divided on Australia’s economic recovery, with 38 per cent feeling optimistic and 35 per cent feeling neutral about their pospects.
The notes that the majority of the small-business owners are confident in their own business growth, with 24 per cent optimistic their business will grow and 38 per cent cautiously optimistic about their recovery.
“Small businesses have had to become more resilient, agile and innovative to survive the last couple of years, and they will be more prepared to take on new challenges,” BizCover CEO Michael Gottlieb said.
“I think we will continue to see more innovation from these businesses as they strive to take on changing market conditions. I also think we will see record growth for new small businesses in Australia.”
BizCover found in its report that the most pressing challenge in 2022 are external factors beyond the control of small-business owners, such as future COVID responses or climate change. Add to that the soaring petrol prices due to the crisis in Ukraine, the impact of these external pressures keeps evolving.
“Could the budget help small-business owners build resilience to elements they cannot control?” BizCover asks in the report.
While business tax breaks cannot adequately address these complex global challenges, though they could potentially relieve some cashflow pressure – a major challenge for 2022 for 17 per cent of small-business owners, according to the research. And with the subsidies towards the costs of cloud-based software and platforms or a new or improved website, the report noted that it is an opportune time to invest in online marketing platforms and services, which can help business growth.
The report also noted that the response to the global pandemic certainly accelerated the adoption of new technology – out of sheer necessity and the small businesses who quickly moved to online solutions were more likely to report their 2021 business performance as good or very good.
Still, Australia’s small businesses are behind their Asia-Pacific counterparts in digital adoption, according to recent research from CPA Australia. A January survey by BizCover also revealed that only 17 per cent of small businesses plan to invest more in online platforms or technology. Gottlieb hopes that the new budget tax breaks will be a motivating factor in accelerating the digital adoption though it remains to be seen as to how much of an impact it will have in the long term.