The Australian Small Business and Family Enterprise Ombudsman Kate Carnell says the Federal Government’s 2020 Budget is one for the history books, with a record spend that will help lift small businesses out of the COVID crisis and provide a much-needed boost to economic confidence.
The Budget includes a number of new, extended and existing measures to further support small business including:
- $4.3 million for Beyond Blue’s NewAccess service, providing mental health support for small businesses
- $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 – uncapped
- $800 million national digitisation plan
“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,” Ms Carnell said.
Instant Asset Write-off
“In possibly the biggest win to come from this year’s budget, small businesses can now write-off the full value of assets purchased until 2022,” Ms Carnell said.
“This gives small businesses time and certainty to plan to buy major equipment. It also significantly reduces the need for depreciation and cuts red tape.”
A further $1.2 billion will be spent on extending the JobTrainer package, supporting SMEs employing apprentices and trainees with a 50 per cent wage subsidy, up to $7,000 per quarter, for 12 months.
“This is an excellent initiative that responds to the needs of SMEs as they work to come out the other side of this crisis,” Ms Carnell said.
“It incentivises SMEs to take on new staff and helps with labour costs, particularly for young people who are doing a lot of on-the-job learning in the first year.”
Loss Carry Back
“This is a tax initiative that will result in tangible benefits for small businesses that would have otherwise been profitable if not for harsh trading restrictions and lockdowns,” Ms Carnell said.
“It effectively allows a small business that has paid tax on profits in or after 2019 to claim back losses incurred from full year 2020 to June 2022.”
“Its good to see that small businesses will have a tax offset set at 18.5 percent above their company tax rate and the $4 million cap on annual cash refunds will not proceed,” Ms Carnell said. “However, I am concerned the government has failed to clarify the position on software R&D. Small business undertaking innovative work in the software space desperately need certainty around eligibility from government.”
National Digitisation Plan
The Federal Government has pledged $800 million in this year’s budget to help businesses take advantage of digital technology.
“Over $400 million will be allocated to create a national directory, to be administered by the ATO,” Ms Carnell said. “From a small business perspective, it means you can register for an ABN, ACN or licence in just one place – significantly cutting red tape.”
Ms Carnell welcomed the Federal Government’s $4.3 million commitment to Beyond Blue’s NewAccess for Small Business service, which will provide small business owners with free one-on-one telehealth sessions with trained mental health coaches from early next year.
“Mental health is proving to be the next big challenge to emerge from the COVID crisis and it’s particularly impacting the small business community,” she said.
Small Business Viability Review Program
“While the Federal Government has made great strides towards overhauling insolvency rules, it has unfortunately overlooked helping small businesses make the critical first step to sit down with their trusted adviser for a viability assessment” Ms Carnell said.
“My office – in coordination with the national peak accounting and bookkeeping bodies – has been calling for the establishment of a small business viability program, where small business owners facing financial stress can obtain professional support valued at up to $5,000 to access tailored advice on the state of their business.”
Fringe Benefits Tax
“The budget included a number of minor exemptions to Fringe Benefits Tax (FBT), however it’s disappointing the Government has not taken on board our recommendation to abolish FBT for at least two years,” Ms Carnell said.
“Abolishing FBT would have provided a much-needed cash flow boost to the economy and supported struggling small businesses. FBT is discouraging businesses from spending with small businesses, which reduces the amount of money flowing into the economy.”
“The Government missed a golden opportunity to commit to prioritising small businesses when procuring work,” Ms Carnell said.
“It’s disappointing because Australian small businesses should have a larger slice of the pie.
“The total proportion of Commonwealth Government contracts awarded to SMEs in 2018/19 was 26 per cent. Given that 94 per cent of total Government contracts are valued under $1 million with 59 per cent below $80,000, such a low proportion of contracts to SMEs is unacceptable.
“It’s clear current Government procurement processes preference large businesses and that can only change with the establishment of a small business procurement panel.”
Revenue Contingent Loans
“Access to finance is critical to small business survival, particularly at a time when a number of support measures are being tapered or ending entirely,” Ms Carnell said. “Had it been included in the budget, revenue contingent loans would have given small businesses the confidence needed to seek funding to get them through this crisis, so they can grow and employ.”