The Budget and small business

Federal budget

The Australian Small Business and Family Enterprise Ombudsman, Bruce Billson, has welcomed last night’s Federal Budget as “a clear acknowledgement that small and family businesses are central to the nation’s economic recovery and future prosperity”.

The major announcements in the Budget impacting the small-business sector are:

  • $129.8 million to encourage entrepreneurship through the New Enterprise Incentive Scheme (NEIS) and Entrepreneurship Facilitators Program
  • $1.2 billion investment in the digital economy
  • $10 billion guarantee of reinsurance pool to cover cyclone and flood damage across Northern Australia
  • $506 million extension of federal government’s JobTrainer program
  • $10 million over four years on small business deregulation agenda
  • $11 million over three years for national recognition of occupation licences
  • Tax system reform for small business
  • $4.3 million to establish the Mandatory Franchise Disclosure Registry
  • $2.6 million to improve access and awareness of Commonwealth procurement opportunities.

“Tonight’s budget represents a substantial financial and strategic commitment to making Australia the best place to start, grow and transform a business,” Billson said. “These measures will support small and family businesses as they help lead our national economic recovery and play a critical role in securing our future prosperity.”

Instant asset write-off and loss carry-back extension

The ASBFEO described the one year extension of the uncapped instant asset write-off as a “big win for small businesses”, saying that it gives them more time and certainty to plan and buy major equipment, significantly reduces the need for depreciation, and cuts red tape.

Trent Innes, Managing Director, Xero Australia and Asia, backed the extension of the write-off scheme, saying that the nation’s two million small businesses, in particular, were looking to the government for announcements that give them confidence to hire and invest.

“It was pleasing to see the extension of the expanded instant asset write-off scheme and loss carry-back provisions,” Innes said.

While welcoming the loss carry-back announcement, Mark Chapman – Director of Tax Communications at H&R Block – sounded a note of warning for small-business owners.

“Also welcome are the extension of full expensing and the loss carry back for a further year, to 30 June 2023, but not every business wants to write off its fixed asset purchases up front,” Chapman said. “For many small, unincorporated businesses there is simply nothing to celebrate here.

“For a start, the loss carry back scheme relates only to companies – sole traders, trusts and partnerships don’t count. And for those businesses that want to retain some taxable profits – perhaps because the owners want to take advantage of the tax-free threshold – the inability to exit the temporary full expensing scheme is a missed opportunity. Big business can opt out (the legislation was amended last December specifically to allow this) but small business can’t,” Chapman added.

A good budget for tradies

Denita Wawn, CEO of Master Builders Australia, said that builders and tradies will welcome the budget.

“It will boost the confidence of the industry that the recovery can continue to largely ride on the ute’s back,” Wawn said. “This is not an accountant’s Budget it is a nation-builders. It’s a Budget for people that believe in this country’s future like the people who work in the nation’s 400,000 building and construction businesses. Learning from history, the Treasurer has not been tempted to prematurely yank government support in fact he has doubled down on his first pandemic Budget. This will boost the confidence of builders and tradies that the economic recovery can be completed.”

MYOB, the provider of business-management tools, congratulated the Government for prioritising widespread digital adoption in the, saying that this will provide growth opportunities for small business.

Digital gains

“The Digital Economy Strategy will drive substantial economic gains for Australia, with solid investment in areas we know will make a difference for the digitalisation of SMEs,” MYOB’s Chief Employee Experience Officer, Helen Lea, said. “We particularly applaud the investment in e-invoicing as a tool that will yield great productivity returns and shorter payment times for small business.”

The Franchise Council of Australia (FCA) also welcomed the digital initiatives.

“The introduction of new technology in business is moving faster than anticipated and this Budget shows that the government recognises that technological growth and innovation by Australian small businesses,” the FCA’s CEO, Mary Aldred, said. “The pandemic has seen business adjust to more agile systems embracing a digital way of working. The FCA particularly commends the Government’s decision to promote electronic invoicing.”

And Trent Innes of Xero added, ”As a business that deploys artificial intelligence to make life easier for our small-business customers, we welcome the investment in AI capability and skills and will seek opportunities to engage with the government to accelerate the application of the technology.”