What the Budget means for small-business innovation

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Digital adoption and tech skills training for small businesses were a major focus of Tuesday night’s Federal Budget. We sought feedback from stakeholders in the small-business sector for their reaction to the government’s new measures.

Business Council chief executive Jennifer Westacott welcomed the 20 per cent allowance for small business for investments in both digital and training, saying that it will help give them the tools and incentives they need to support the recovery.

“These measures recognise that small businesses have borne the brunt of COVID,” Westacott said. “A raft of common-sense tax simplification measures and red tape reductions will also help small businesses with their cashflow.”

MYOB’s Chief Employee Experience Officer Helen Lea said that she was “delighted” with the announcement from Federal Government that they will support Australia’s small businesses in reaching their online potential.

“This incentive, which will see SMEs garner a $120 tax deduction for $100 spend, will provide rocket fuel to Australia’s 2.4 million small businesses through essential digital investment to ensure their future in the Australian economy,” Lea said. “This announcement is huge news for Australia’s small businesses. Overcoming our gaps in digital capability, which could be life threatening, enables our nation to make leaps and bounds to digitise. SMEs now have an additional ticket to play in the future of our country.”

Lea also welcomed the allocation of a 20 per cent deduction in external training for small businesses in skills including digital, with a particular emphasis on regional Australians.

Mark Chapman, Director of Tax Communication at H&R Block, also highlighted the value of this Technology Investment Boost.

“Businesses will be able to claim the additional deduction on up to $100,000 of expenditure a year,” Chapman explained. “The tax break will apply to any purchases made between 7.30pm tonight, 29 March 2022 and 30 June 30 2023. In addition, there will be a similar tax break for small business that fund digital training and upskilling for staff. The Skills and Training Boost gives a small business that spends $100 on training employees a $120 tax deduction.”

Ron Gauci, CEO of the Australian Information Industry Association (AIIA), identified the employee share reforms – in which people working in start-up businesses will be able to receive more incentives and bonuses – as an initiative that should encourage further innovation in Australia. Employees will be eligible for up to $30,000 in shares per year.

“The employee share reforms will help skilled innovators attract talent and see innovations move from the R&D stage to commercialisation,” Gauci said. “Australia is very good at supporting R&D, but we must make steps to improve support to commercialise brilliant Australian IP. We risk continuing to see brilliant Australian innovations sold overseas without better support. Policies such as the changes to the employee share scheme are a great step to supporting Australia’s future economic prosperity.”

Denita Wawn, CEO of Master Builders Australia, pointed out that the construction industry has more SMEs than any other sector in the economy and one of the lowest rates of digital take up.

“It’s great to see the Government announcing new tax deductions to support thousands of mum-and-dad businesses to take up more digital business management solutions, which in the current environment are more critical than ever,” Wawen said.

Chris Dahl, Director of Sales and Growth at Pin Payments, said that it was encouraging to see the government investing in digital and providing tax incentives for small businesses.

“Such measures will assist SMEs reluctant to invest in technology due to their constrained budgets,” Dahl said. “However, it will not necessarily contribute to their survival. Small businesses have been hit the hardest in the last two years, and it’s disappointing that the government did not go further. Very little support was included to help with small business cashflow and depleted capital. Still, greater rebates surrounding staff training is a positive. The rebate will ensure talent feel nurtured, reduce mass movement in the market and promote business productivity.”

And Mark Khabe, Co-founder of PRIME BPM, lauded the “significant weightage to the importance of digital innovation and small businesses” in the Budget.

“Backing small businesses with the lowest tax rates in 50 years is a great move to support the recovery and growth of the SME sector, which has been severely impacted by disruptions created by the pandemic and extreme weather conditions,” Khabe said. “The government’s thrust on digital technologies and technology advancement is a right step that will provide significant impetus to the sector. The tax incentives surrounding cloud computing, eInvoicing, cyber security and web design will encourage SMEs to further speed up digital innovation and enhance their businesses. Small businesses without the cashflow to invest in digital transformation will now have the capacity to do so, which will positively affect the overall economy.”