Budget offers a fairer go for smaller firms

| May 10, 2018

Kate Carnell, Australia’s Small Business Ombudsman, has welcomed the steps outlined in the new Federal budget to achieve a level playing field for small firms.

Initiatives targeting tax avoidance and illegal phoenixing will empower small businesses who are doing the right thing to compete.

Small businesses employ 4.7 million Australians and the Government’s focus on apprenticeships, traineeships and the mature aged workforce will provide a wider pool of resources, while the extention of the $20,000 instant asset write-off for another 12 months until 30 June 2019 is welcome.

The immediate tax relief for low and middle income earners will also be a significant benefit to, the nearly 40%, small businesses that are unincorporated.

However the Ombudsman argues there are missed opportunities among the good news. There was little mention of how to handle the rising cost of energy for small business, for example.

Furthermore, the Research and Development Tax Incentive has been aligned to company tax rates, meaning small firms will see a reduction in the offset available and so will be discouraged from undertaking R&D.

The streamlining of transactions with government should offer a boost for SMEs. The Government will provide $92.4 million for the Digital Transformation Agency to create the GovPass Program, for example, which should give firms easier access to digital services, such as creating a digital identity and complete a Tax File Number application online.

The Government has also allocated $700,000 to investigate where blockchain technology could assist the GovPass Program.

In terms of training, the levies from the Skilling Australians Fund will be prioritised for apprenticeships and traineeships.

The Government will also provide $189.7 million over five years to support mature age workers that are registered with a JobActive provider and $19.3 million over three years to help workers aged 45–70 to transition into new roles.

Measures to tackle the black market economy will also benefit firms which play by the rules. The use of cash payments over $10,000 will be banned, for example, and all commercial transactions over that amount will have to be carried out by eftpos or cheque.

Businesses bidding for Government contracts of over $4 million will need a statement of a satisfactory tax record from the ATO and directors will not be able to resign if it leaves the company with no directors. Additionally, the Director Penalty Regime will be extended to include GST and other taxes.