Prime Minister Scott Morrison has described the upcoming Federal Budget as “the most significant since the second world war”, writes Australian Small Business and Family Enterprise Ombudsman, Kate Carnell.
The COVID crisis has plunged Australia into the worst trading conditions we have seen in living memory,
Small businesses are among the biggest casualties, but they also have the combined power to lead us out of this recession, with the right support measures in place.
Lockdowns, tough restrictions and border closures have placed many small businesses under enormous financial pressure.
Why we need a Small Business Viability Program
That’s why my office, with the backing of the nation’s peak accounting and bookkeeping bodies, are making a united call for a Small Business Viability Review program to be included in the Federal Budget.
Under the jointly proposed Small Business Viability Review program, small businesses would be eligible to obtain a subsidy valued up to $5,000 to access a tailored 15-month plan from an accredited professional on how and whether to turn their business around or exit.
Small businesses need access to an accredited professional adviser such as an accountant or bookkeeper to judge the viability of the business now.
It’s the critical first step small businesses need to take so they can make an informed decision about the future of their business.
Our modelling indicates 500,000 small businesses would take up the viability subsidy at a budget expense of about $1.5 billion.
Insolvency overhaul may helo businesses survive
Funding for a viability assessment, in addition to the federal government’s recently announced plans to overhaul insolvency rules would make it easier, faster and cheaper for small businesses to restructure or wind up.
We also support the government’s temporary extension of insolvency and bankruptcy protections to the 31 December 2020, giving otherwise viable small businesses more time to recover, preventing a wave of unnecessary insolvencies.
What about taxes?
There’s a number of tax issues we believe this budget should address.
My office has also written to the Treasurer, proposing a two-year deferral on legislated superannuation guarantee increases, while also cutting the 15% tax on compulsory employer superannuation guarantee contributions to 7.5% during that time.
The measures offset each other so workers end up with e similar superannuation amount as they would under the scheduled increase.
It’s about getting the balance right by ensuring small businesses aren’t hit with rising costs and workers are no worse off.
My office has also urged the Federal Government to abolish fringe benefits tax (FBT) for at least two years to provide a much-needed cash flow boost to small businesses and the economy.
Making the instant asset write-off threshold of $150,000 a permanent fixture is also recommended, particularly as small businesses come out the other side of this crisis and think about investing in their business again.
What about mental health?
Finally, the Federal Government has already invested heavily in mental health initiatives with leading organisations such as Beyond Blue, but this support will need to be ongoing.
The enormity of this crisis and the psychological distress it has caused for small business owners cannot be underestimated.
Given small business loans are often secured against the family home, the stakes are high and that is understandably taking a huge toll on small business owners’ mental health.
It’s vital to seek help if you need it. Our My Business Health web portal provides free practical resources to help with running your business and also links to leading mental health organisations such as Beyond Blue. If you work in a small business that advises other small businesses, Beyond Blue has just launched a free online training course to help support the mental health of your small business clients.
Now read this