The Federal Budget is a lesson for all in business. Owners and managers of small to medium-sized operations may not find its impact a game changer, but it did feature a few concessions available to Australian small businesses.
As background, the Treasurer has based this year’s Budget on an anticipation that the Australian economy will grow by 3.25 per cent in the 2012-13 financial year, and by 3 per cent in the following years. Mr Swan also anticipates delivering a modest $1.5 billion surplus in the next year, converting a current deficit of around $40 billion.
Although the Government did not implement a 1 per cent drop in the corporate tax rate from 30 to 29 per cent, an olive branch was held out to small businesses in the form of various tax concessions and advocacy measures
The loss carry back scheme
For those businesses incurring losses in the current competitive, price-sensitive marketplace, the package included the introduction of a loss carry-back scheme. This allows companies to claim tax losses of up to $1 million, allowing a refund against previous tax paid.
For a business that announces a profit one year and pays tax, if it makes a loss the next year, the tax previously paid can be claimed in full. Currently, small businesses can only carry their losses forward to be offset against future income and future profits. The new scheme will be introduced 1 July 2012.
Depreciating assets write-off
Also from 1 July, up to $6500 can be written off immediately for investment in any new business asset – this is an increase on the current threshold of $1000. Similarly, the first $5000 expended in the purchase of a new motor vehicle can be written off. According to the treasurer the estimated numbers of business this is expected to benefit is 2.7million.
Small business advocacy
It was announced that $27.5 million will be put forward to extend the Small Business Advisory Service program for another four years. The service provides business owners with low cost planning and management services.
In fact, the Government claims that since its introduction just four years ago, the Small Business Advisory Service has provided over 354,000 separate advisory services to more than 187,000 small businesses in Australia. The Government is also committed to introducing the first Australian Small Business Commissioner in the second half of this year who will be a first point of contact for small business services and information.
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This article represents the views of the author. You should base any of your business planning on advice from your own experts.