Login
ISCOVER
Several players working in the SME space have welcomed the budget’s measures to improve growth and support for small and medium enterprises, but argue that more could have been done to make the day-to-day running of SMEs easier.
On Tuesday, Treasurer Scott Morrison revealed the federal budget for 2017/18 that included, amongst other measures, a tax cut for incorporated small businesses with a turnover of up to $10 million and for unincorporated businesses with a turnover of up to $5 million; incentives for state governments to cut red tape; and a 12-month extension to the instant asset write off for equipment purchases of up to $20,000.
To continue reading the rest of this article, please log in.
Looking for more benefits? Become a Premium Member.
Create free account to get unlimited news articles and more!
Looking for more benefits? Become a Premium Member.
Speaking after the announcement of the budget, the Council of Small Business Australia (COSBOA) applauded the new measures, with CEO Peter Strong saying: “For the third year in a row, the federal government has demonstrated a genuine commitment to small business.
“By setting aside almost $1 billion for the $20,000 instant expenditure write-off during the next financial year – in addition to the expansion of tax cuts and instant asset write-offs for businesses with annual revenue of up to $10 million – the Australian government is clearly walking the talk when it comes to supporting Australia’s 2.5 million small businesses”.
Infrastructure spending would have ‘greatest impact’ for SMEs
Mr Strong also welcomed the investment in infrastructure, such as the $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.
He said: “Investment in regional infrastructure, such as the Melbourne to Brisbane inland rail project provides regional businesses with improved access to potential customers in large capital city markets, as well as making it easier to connect with international markets.”
The CEO of specialist lender Scottish Pacific, Peter Langham, agreed, stating that it was the infrastructure spending that would have the “greatest long-term impact on the SME sector”.
“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,” Mr Langham explained.
He added: “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.”
The Scottish Pacific CEO said that he thought the impact of the $20,000 instant asset write off deduction “may be over-stated”, but said it was, nonetheless, “a welcome move that will encourage investment in plant and equipment for the more than three million small businesses with annual sales under $10 million.”
He said that it would not, however, have the same “long-term positive impact that would come with an extensive SME tax and red tape overhaul”.
Mr Langham added: “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 concluded.
Asset finance write off could have gone further
Many in the SME space have welcomed the extension of the asset write off measure, which has also been expanded to businesses with a turnover of up to $10 million (up from $2 million).
Cameron Poolman, CEO of online small business lender OnDeck Australia, commented: “Small businesses will benefit as a reduction in their tax liability will allow them to focus on business growth and expansion. This is a real benefit for small business and we feel if used effectively it could help plug the gaps in investments and tax management.”
Meanwhile, the Commercial Asset Finance Brokers Association of Australia (CAFBA) has also welcomed the write off, but argued that the budget could have gone further.
David Gill, CEO of the association, told SME Adviser: “We have been pushing for an extension of the instant asset write off and we also wanted an increase from $20,000 to $50,000 for the limit, because it would capture a lot more SME business.
“They didn’t do that, but at least they extended it by 12 months, which we are grateful for.”
David Gandolfo, president of CAFBA, added: “Overall, I think the budget is pretty good.
“There could have been things that were in there that weren't… we would have liked the asset write-off to at least include indexing of the $20,000 limit, but further – expand to $50,0000 — and certainly [for SMEs] to be able to claim 50 per cent of the cost of an asset, whether that is new or used asset, in addition to normal depreciation…
“But I'm happy that the asset write-off is continuing... it’s not just about the money, it’s what [SMEs] do with that money and the plant machinery equipment that they buy to equip their businesses to increase their throughput capacity and employ more people and create wealth. It has a huge knock-on effect.”
He advised that brokers working in the SME sector will “definitely want to be heightening their clients' awareness of these changes, particularly coming in to 30 June, because balance date is when [SMEs are] going to get the benefit from it”.
[Related: Budget 2017 – what's in it for SMEs?]
