The CEO of Scottish Pacific, a major specialist SME funder, says while the instant capital expense deduction gained attention from the Federal Budget, the boost to infrastructure spending is likely to have the greatest long-term impact on the SME sector.
Scottish Pacific CEO Peter Langham said while there was some attempt to address the pressing issue of reducing red tape for the sector (with the government announcing $300m in funding to states that cut red tape to small business), it was not clear in detail how this would work or how effective it would be.
“Simplifying the complex tax system, getting rid of payroll tax and cutting red tape would have the biggest daily impact for Australia’s small to medium business sector,” Langham says.
“While the instant tax deduction of up to $20,000 for capital expenses is a popular measure, it does not have the long term positive impact that would come with an extensive SME tax and red tape overhaul. Our SME Growth Index surveys the small business sector across Australia twice a year, and high and multiple taxes is always listed by business owners as a barrier to growth.
“Of the 2017 Federal Budget measures most likely to have long-term positive impact for small business, I would highlight the boost in infrastructure spending,” he says.
Small business budget highlights
The commitment to infrastructure spending includes $8.4 billion for the Brisbane to Melbourne inland rail line, $10 billion to fund priority regional and urban rail developments and $5.3 billion to build Badgerys Creek airport in Western Sydney.
“The flagged infrastructure projects will help small to medium businesses with accessibility to staff and markets and boost the sector by creating jobs now and down the track,” Langham says.
$20,000 instant tax deduction – the continuation of the highly popular immediate deduction on capital expenses worth up to $20,000 is the Budget’s water cooler topic for SMEs.
“Its impact may be overstated, however, it is still a welcome move that will encourage investment in plant and equipment for the more than three million small businesses with annual sales under $10m,” Langham concludes.