Small businesses are looking to Canberra as Treasurer Scott Morrison prepares to hand down his second budget on Tuesday. Morrison is set to forecast a surplus in 2020-21 and says “things are beginning to look up – there are clearly better days ahead”.
But whether these better days will provide relief for small business is another question. MySmallBusiness asked the Australian Small Business and Family Enterprise Ombudsman, the Council of Small Business of Australia and CPA Australia what’s on their wish list for the 2017 budget.
Lower small business tax rate
The 2016 budget lowered the small business tax rate to 27.5 per cent with a further cut to 26 per cent on the cards for 2025.
Council of Small Business of Australia head Peter Strong, wants this cut brought forward for small business.
Peter Strong, chief executive of the Council of Small Business of Australia, says further tax cuts are needed. Photo: Alex Ellinghausen
“This will encourage investment and create new employment opportunities,” he says. “We need a coherent plan, not just a bit here and a bit there.”
Extend the instant asset write-off
The $20,000 instant asset write-off was introduced as a temporary measure in 2015 but winds up next month.
Paul Drum, head of policy at CPA Australia, says the government is likely to extend the instant asset write-off beyond this date with Small Business Minister Michael McCormack making “some overtures” over recent months about this.
“Unless something has happened over the last couple of weeks it looks likely to happen,” he says. “CPA Australia says it should be rolled into the tax system as a permanent feature but I would be inclined to think because of other budget pressures it might only be [extended] for a couple of years.”
CPA Australia’s Paul Drum says an extension of tax write-offs is likely. Photo: Josh Robenstone
Ombudsman Kate Carnell wants to see the instant asset write-off offered to businesses with a turnover of up to $10 million. The increase in turnover was in the 2016 budget but still has not passed Parliament.
“It’s in the lap of the gods a bit but would be great now that the Australian Tax Office’s definition of small business is under $10 million [turnover],” she says.
Kate Carnell, the Small Business and Family Enterprise Ombudsman, would like to see write-offs extended. Photo: Louie Douvis
Increase the instant asset write-off
Carnell would also like to see an increase in the instant asset write-off for selected industries.
“It would also be good for the government to look at increasing the $20,000, particularly in certain industries, farming and manufacturing being the two,” she says. “You don’t get much of a tractor for $20,000.”
Encourage paying on time
Strong wants to see government backing in the budget for the Australian Small Business and Family Enterprise Ombudsman’s pay on time campaign.
“Having the government lead the way on that, if it contracts with big business it requires business to pay suppliers within 30 days,” Strong says.
Carnell says the government could fund a national payment transparency register where big companies register their payment times and terms on the public record.
“We would like them to put some money aside and it wouldn’t be much to set up a register,” she says. “Payment times is a huge issue for small business”.
Following the Australian Small Business and Family Enterprise Ombudsman banking inquiry Carnell says she is hoping for “strong comments” from the government in the budget on banking regulation.
“The current industry-based code should be mandatory and regulated with ASIC [the Australian Securities and Investments Commission] and there should be an ASIC small business commissioner,” Carnell says.
“A mandatory code for ASIC would include a range of things including getting rid of non-financial default for small business loans of up to $5 million. Both of those come with some level of cost but not a lot.”
The Council of Small Business of Australia wants to see more support for start-ups in the form of assistance programs and encouraging the development of low-cost seed capital opportunities for innovators and entrepreneurs.
“Additional tax concessions in the first three to five years of operation must also be considered,” Strong says.
A simplified business entity
CPA Australia’s pre-budget submission pushes for a simplified business entity for small businesses and particularly for start-ups.
“It would cut a swath through the complexity for start-ups,” Drum says.
“It would have limited liability like a company but it would allow income streaming for the shareholders and you could retain income in the entity. If small business goes into a company it doesn’t have the flexibility of streaming income to family members.”
The Council of Small Business of Australia wants the government’s paid maternity leave to be made more accessible for small businesses as it says many women who are running a small business are unable to take 18 weeks’ paid leave in one block.
“This should be able to be staggered over a 12-month period,” says Strong.
“At the moment it’s virtually impossible for a woman who is running her own business to get access to paid parental leave.”