There has been widespread relief in the small-business sector about last night’s federal Budget, which introduces a raft of measures designed to help small and family businesses recover from the economic downturn brought about by the COVID pandemic.
In the midst of what the Australian Small Business and Family Enterprise Ombudsman (ASBFEO), Kate Carnell, describes as “the worst conditions we have seen since the Great Depression”, the Budget focused on supporting small business with measures including:
- $1.2 billion on the extension of wage subsidies for apprentices and trainees
- $850 million on JobMaker hiring credit payable for up to 12 months to employers who hire young people (aged 16-35 years)
- $15 billion in JobKeeper payments
- $1.9 billion for loss carry back tax provision
- $26.7 billion in instant asset write-offs for business – with the annual revenue threshold extended to encompass far more businesses, boosting medium-sized enterprises as well as micro- and small businesses
- $4.3 million for Beyond Blue’s NewAccess service, providing mental health support for small businesses
- $800 million national digitisation plan.
“[The] Budget represents the biggest-ever fiscal response to an economic downturn in Australian history,” Carnell said. “Given the number of measures that target the small business sector in this Budget, the Federal Government has clearly acknowledged the role small and family businesses have to play in the nation’s economic recovery.”
The ASBFEO highlighted the instant asset write-off measure as the “biggest win” for SMEs.
“Small businesses can now write-off the full value of assets purchased until 2022,” Carnell said. This gives [them] time and certainty to plan to buy major equipment. It also significantly reduces the need for depreciation and cuts red tape.”
The Ombudsman did, however, bemoan the Government’s failure to establish a small business viability program.
“Small businesses need access to an accredited professional adviser to judge the viability of their business now, so they can make an informed decision about the future of their business and actually do something about it,” Carnell said. “Unfortunately, small businesses with cashflow issues, compounded by falling revenue, may not seek out professional advice because it’s deemed to be unaffordable. This could imperil their future.”
Greg Ellis, CEO of MYOB, who provide management tools to over a million businesses, welcomed the Budget measures.
“The initiatives outlined in [the] Budget are designed to deliver strategies to energise the SME sector by driving demand and injecting spending back into the economy. These are key strategies for our pathway out of recession,” Ellis said. “Much of this spending will benefit small businesses, be it through direct employment driven by infrastructure spending, wage subsidy programs, or via the accelerated personal income tax cuts which will stimulate discretionary household spending.”
Andrew Conway, CEO of the Institute of Public Accountants (IPA) said that the measures brought renewed focus on small business survival and growth to drive the post-COVID economic recovery.
“Australia’s prosperity has been described historically as ‘riding on the sheep’s back’, our economic recovery from this crisis will be riding on the back of Australia’s small business owners and operators,” Conway said. “This Budget provides the critical support small business needs to build its confidence to stay open, to rebuild and start employing…we applaud the Government for providing a fast-track for small business to invest and incentive to grow.”
And Mark Molesworth, Tax Partner at BDO Australia, welcomed the asset write-off as a boost for small business.
“Businesses with a turnover up to $5 billion will be able to deduct the full cost of eligible capital assets. For small and medium sized businesses, second-hand assets will also be covered,” Molesworth said, adding that with dismissal of changes to Research and Development tax incentives is good news for start-ups.