The Abbott Government has released its first Federal Budget to much furor. In all the politicking, demonstrations and media hype it can be difficult to know what this budget means to you and your business.
We have summarised for you below, those parts of the budget that are most likely to impact on SMEs. But we remind you that all of this has yet to pass through parliament, so don’t start counting chickens just yet.
Ups and Downs in taxation and other costs
Corporate tax cuts:
From 1 July 2015, the corporate tax rate will be reduced by 1.5 percentage points, to 28.5%: a positive for those businesses structured as Pty Limited companies.
Debt levy for companies:
Companies with taxable income over $5million are expected to be required to pay a 1.5% debt levy to fund the Parental Leave Scheme. Of all the budget measures, however, this one seems the most up in the air.
Deficit tax levy:
For the next three financial years, all individuals earning over $180,000 will pay a 2% Temporary Budget Repair Levy. This levy is likely to impact businesses operating as sole traders and partnerships.
FBT rate increase:
The FBT will increase from 47% to 49% from 1 April 2015 to 1 July 2017 to reflect the Temporary Budget Repair Levy.
R&D Tax Offsets cut:
The rates of refundable and non-refundable R&D tax offsets will be reduced by 1.5 percentage points to 45.5% for the refundable offset and 38.5% for the non-refundable offset, commencing 1 July 2014.
Superannuation Guarantee increase:
The pausing of the superannuation guarantee rate at 9.25% for 2014/15 and 2015/16 has been removed and the rate will increase to 9.5% from 1 July 2014.
Fuel Excise indexation:
Currently capped at 38.1 cents per litre, the fuel excise has been re-indexed and will now rise in line with inflation. This may add considerably to costs for those in logistics and agribusiness.
Mature Age Workers Incentives:
Businesses will get up to $10,000, over 24 months, to hire full time mature age workers (over 50). Time to start thinking differently about grey hair.
Government Support Programs for SME’s
Industry Skills Fund:
From 1 January 2015, the government will establish a training fund for SMEs to support specialised training programs. The industries targeted include health and biomedical, mining and energy and advanced manufacturing.
Support Loans for Tradesmen:
From 1 July 2014 the government will provide concessional Trade Support Loans of up to $20,000 over a 4-year apprenticeship. This will replace the current “Tools for your Trade” program.
Entrepreneur’s Infrastructure Program:
Over the next five years the government plans to spend $484 million on a program to enhance the capabilities of small businesses to commercialise new products. However, it should be noted that at the same time the government will be scrapping the Enterprise Connect program and reducing funding to Clean Technology programs and Cooperative Research Centres.
Tourism Australia Grants:
An additional $50million has been added to Tourism Australia’s budget for a new grant scheme to help small operators promote to international markets.
Improving access to Commonwealth Contracts:
Funds have been set aside to provide procurement guidance to SME’s in an effort to ensure they are not disadvantaged in government tenders.
Extension of Unfair Contract Provision:
Existing unfair contract provisions that protect consumers against unfair contracts imposed by large businesses are set to be extended to include small businesses.
Red Tape Reduction
Small Business Ombudsman:
The existing Office of the Australian Small Business Commissioner will be transformed into a Small Business and Family Enterprise Ombudsman with extra powers and functions. The Ombudsman will act as a single point of contact for SMEs to access Government support programs and engage in dispute resolution.