The Budget handed down on Tuesday night will help small businesses deal with some of the contemporary challenges they face as they prepare for a forecast lower rate of economic growth and continued pressures on their businesses. However, more needs to be done, writes Australia’s Small Business and Family Enterprise Ombudsman, Bruce Billson.
There’s no mistaking that it is tough going for the entrepreneurial women and men who take on the task of running a small business or being self-employed.
The budget provides support to tackle some immediate pressures, particularly with high energy input costs, an asset write-off boost to help re-equip and invest in productivity, tax administration changes that will help with vital cash flow challenges, and much needed advice to deal with cyber security fears.
Energising enterprise can deliver a stronger economy and these measures are a step towards delivering that.
Electricity and energy deductions
Electricity bills are one of the growing pressure points, but they should be lower than they would otherwise be through the announcement to have power companies deduct $325 from the power bills of one million eligible small businesses as part of the Australian Government’s cost of living relief package.
The benefit will depend where small businesses are located and how much electricity they use. In most states, the benefit will be doubled to $650 by a matching state contribution, but disappointingly, there is no extra assistance for small businesses in Victoria.
As flagged by the Government before Budget day, there’s also a tax incentive worth up to $20,000 to provide an additional 20 per cent depreciation for eligible assets that support electrification and more efficient use of energy by small businesses.
The Budget provides a temporary increase in the instant asset write-off threshold, to $20,000 on a per asset basis for 12 months from 1 July, for eligible small businesses with a turnover up to $10 million.
The previous arrangement providing a write-off of up to $150,000 with a turnover threshold of $500 million, introduced during the COVID pandemic in support of business adapting and transforming to whether the storm, was expiring on 30 June and would have reverted to a $1,000 write-off from 1 July.
You can expect to see a rush of advertising – and perhaps even some good deals – aimed at small businesses before 30 June to take advantage of the higher rate.
Cyber security support welcomed
The recent spate of high-profile cyber attacks has drawn attention to the vulnerabilities that many business owners feel and sadly, we know that vast numbers of small and family businesses every year are being compromised and, in some cases, profoundly damaged by a range of scams and cyber attacks which can devastate their business.
The Australian Cyber Security Centre estimates there is an attack on a business every seven minutes and, on average, the cost to a small business is at least $39,000.
The Budget provides $23.4 million over three years for the Cyber Wardens program, delivered by the Council of Small Business Organisations Australia (COSBOA), to support small businesses to build in-house capability to protect against cyber threats. Some 15,000 small businesses will benefit from the expansion of this program, which is a constructive step in a strategy that needs to be deeper and wider to support preparedness, resilience, response and recovery.
I also encourage small businesses to visit the ASBFEO website for helpful guides on how to stay secure online and practice good cyber hygiene habits, and a cyber security checklist.
Funding for Tax Office improvements to help small business cash flow
Some of the tax changes in the budget should help assist cash flow, notably the move to reduce the PAYG and GST uplift on quarterly payments from 12 per cent to 6 per cent for 2023-24 income year.
There’s also extra funding for the Tax Office for modest tax administration improvements which hopefully can reduce the time small business owners spend doing their tax. This includes extending the period to amend their income tax returns from two to four years, permitting their tax agent to lodge multiple Single Touch Payroll forms on their behalf and, importantly, getting tax refunds faster by the ATO reducing the use of cheques.
The ATO is also getting more funding to improve its review process for small businesses who are unhappy with their tax assessment, with an 18-month trial to begin in July 2024, and to provide five new tax clinics from January 2025 to improve access to tax advice and assistance.
The Tax Office has extraordinary powers and we remain concerned about this being exercised in a proportionate way, given the muscled-up approach to recouping long-term debts that small businesses may not even be aware exist.
I remind small businesses that we offer a low-cost pathway to resolve disputes through our Tax Concierge Service, which allows small and family businesses that object to an assessment from the ATO to get an independent reality check. And if their case has got some legs, we’ll assist its onboarding into the Administrative Appeals Tribunal and help navigate that process.
A good business pays. It pays its suppliers and customers, its staff and its tax obligations on time – but it also deserves a fair go.
Where the 2023 Budget missed the mark …
Time-poor small businesses also need more support to understand Australia’s workplace relations rules, which are complex, onerous and difficult for small businesses to navigate.
Small business employers are still grappling with the significant and unsynchronised changes to workplace rules that were legislated in 2022, including regarding sexual harassment, domestic and family violence leave, requests for flexible work arrangements and multi-employer bargaining. As the government intends to make further changes to wage non-compliance, casual employment and ‘employee-like’ arrangements, we are concerned about cuts to the Fair Work Ombudsman, as it is vital it is properly resourced and focused to provide education, support and guidance to small business employers.
We recently launched an inquiry into Commonwealth procurement, so will be particularly interested to see how the Department of Finance will use the $18.1 million it received in the Budget to improve the ability for SMEs to compete for government procurement, including improving AusTender to increase transparency and establish a supplier portal for panels.
Startups are the focus of an announcement to spend $392.4 million over four years to establish the Industry Growth Program to support Australian SMEs and startups to commercialise their ideas and grow their operations. This is welcome, but it’s supported by funds redirected from the Entrepreneurs’ Program.
It was disappointing to see a reduction in support for the under-promoted Self-Employment Assistance Small Business Coaching program and the Entrepreneurship Facilitators Program. These programs have low awareness and can help with the success and durability of many of the 1.6 million Australians who derive their livelihoods from self-employment and make a vital contribution to the economy.
Small business is a dynamic and fast-growing sector that allows people with an entrepreneurial spirit to pursue their dreams.
Giving energy to this enterprise will help increase the $438 billion contribution small business makes to the economy.
Don’t forget, small businesses have a proven track record of lifting our nation. Remember, coming out of the global financial crisis, almost 60 per cent of the new jobs were created by small employers even though the sector only accounted for 40 per cent of the workforce.
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