While this year’s Budget wouldn’t have seen many small business owners reaching for the champagne, there were several announcements that will benefit them. Recent research shows 23% of small businesses are started outside capital cities, and the government has now recognised the significant role these businesses play in the nation’s economy.
With small business owners having had time to absorb the budget, they should now consider making plans and taking action. Here’s some concrete advice on how small businesses can make the most of the changes:
1. $20,000 instant asset write-off extended
The $20,000 instant asset write-off scheme stays for another year. Improve your cash flow and deduct the value of eligible assets straight away, instead of over several years.
The Solution: Take advantage of the write-off on eligible purchases before the limit changes back to $1000 from 1 July 2018. For example, small graphic design agencies might upgrade their design software and computers, while café owners may upgrade their coffee machines, dishwashers etc.
2. Banks and multinationals feel the burn
The new Australian Financial Complaints Authority will manage banking disputes. It’ll push for transparency and enforce bigger fines for rule breakers.
A new levy on the Big 5 banks has disappointed the banking sector, with costs already flagged to be passed to customers.
There’s more money in the ATO coffers to get multinationals to pay their fair tax share.
The Solution: Wait to see if the banks pass on the extra costs. Know your rights when dealing with banks and consider moving to a smaller bank with lower fees and charges.
3. A regional leg up
Investment in regional transport infrastructure and remote and regional students to boost access to regional businesses and open up city markets.
The Solution: Keep your ear to the ground for new regional opportunities and government programs. Investing your time could help you grow your customer base.
4. Company tax rates on downward slide
The tax rate for incorporated small businesses drops from 30% to 27.5%, heading to 25% by 2026-27. The definition of ‘small business’ expands from $2 million up to $10 million turnover.
The Solution: Check your business structure with your accountant to see how you can take full advantage of changes. If you’re registered as a sole trader, you pay personal tax rates, not company tax rates. You get a tax-free threshold, companies don’t. Company tax applies to all income, but is less than the highest personal tax rate.
5. Capital gains rorts under the microscope
From July, the ATO is on the lookout for rorts of the capital gains tax (CGT) break on small business assets.
The Solution: Get financial advice if you plan to sell your business and claim CGT concessions.
6. Foreign workers support apprenticeships
You’ll be hit with a levy if you hire employees on skill shortage visas (replacing the 457).
A temporary ‘foreign’ employee sets you back $1200 a year. A permanent hire incurs a one-off $3000 fee. The cash funds the new Skilling Australians Fund, supporting apprentices and trainees.
The Solution: Be aware of your visa responsibilities and look for opportunities to hire Australians. Look out for new apprenticeship incentives and schemes to help upskill locals.
7. Bigger consumer law fines
Increased penalties for breaching Australian Consumer Law (ACL) are here from 1 July, 2018. Breaches can range from not replacing a faulty product, to putting customer safety at risk with dangerous goods. Companies are on the hook for up for $10 million, individuals for up to $500,000.
The Solution: Know your rights and responsibilities and stay on the right side of ACL. Talk to your lawyer or business advisor to stay across these changes, or visit government websites.
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