The Small Business and Family Enterprise Ombudsman Bruce Billson suggests last night’s budget announcement paves the way for a small business-led economic recovery.
The budget includes several new and enhanced measure that will support small business including $129.8 million to encourage entrepreneurship through the New Enterprise Incentive Scheme (NEIS) and Entrepreneurship Facilitators Program, a $1.2 billion investment in the digital economy and a pledge of $506 million to extend the government’s Job Trainer program.
Budget paves the way for small business recovery
“Last night’s budget represents a substantial financial and strategic commitment to making Australia the best place to start, grow and transform a business,” Billson said.
“These measures will support small and family businesses as they help lead our national economic recovery and play a critical role in securing our future prosperity.”
Boost to startup ventures
The ombudsman has called out the expansion of the NEIS and entrepreneurship facilitators programs as key drivers to support new entrepreneurs on their journey.
“This initiative will help put the wind in the sails of fledgling small businesses and encourage the Australian entrepreneurial spirit,” Billson said.
“The number of New Enterprise Incentive Scheme (NEIS) places will lift from 8,600 to 12,000 per year for people looking to create their own start-up livelihoods. It will also support existing micro-businesses to adjust to changing labour market conditions to ensure these businesses remain viable and resilient to changes in the face of turbulent trading conditions.”
Helping train the next generation
Last night’s budget announced the extension of the JobTrainer program by a further 12 months. Billson said the program – which subsidises apprentice wages by 50 per cent – will allow more small business to take on staff and young people to get valuable training they need to succed.
“JobTrainer has proven to be a highly effective incentive for SMEs to take on new apprentices and trainees,” Billson says.
“The cost of apprentices and trainees can be significant as they learn the ropes, so small businesses will welcome the extension of this wage subsidy. JobTrainer will also offer thousands of young Australians low-fee or free courses – critically in fields where small businesses are struggling to find staff.”
Digital Economy Strategy
Billson suggests the government’s pledge of $1.2 billion towards enhancing the digital economy, including a 30% tax offset for the video game industry will allow Australian businesses to become globally competitive.
“We welcome the Australian government’s commitment to help SMEs build their digital capacity and drive business up-take of e-invoicing. With 1.2 billion invoices exchanged in Australia every year, making the switch to e-invoicing would add an estimated $28 billion to the Australian economy over 10 years. For SMEs, we know e-invoicing streamlines productivity and improves cash flow with reduced admin and faster payments.”
Tax system reform
Small businesses in dispute with the ATO will now get a fairer go, under new rules proposed in the budget. The Administrative Appeals Tribunal (AAT) will be given greater powers to pause or change debt recovery actions applying to a small business in dispute with the ATO. Billson suggests this is a win for SMBs.
“Small businesses disputing an ATO debt in the AAT will get a fairer go by stopping the ATO from relentlessly pushing on with debt recovery actions against a small business, while the case is being heard,” Billson says.
“I commend the government which has acted quickly to implement a key recommendation in our recently released report: A tax system that works for small business which will allow small businesses to pause ATO debt recovery actions until their case is resolved by the AAT.
“Currently, small businesses are only able to pause or modify ATO debt recovery actions through the court system. This can be prohibitively expensive and time consuming for a small business.
“Under the proposed changes, small businesses can save thousands of dollars in legal fees, not to mention up to two months waiting for a ruling.
“In line with our recommendation, the AAT will be able to pause or modify ATO debt recovery actions, such as garnishee notices, interest charges and other penalties until the dispute is resolved.
“It means that rather than spending time and money fighting in court, small business owners can get on with what they do best – running and growing their business.
More affordable insurance
The small business insurance affordability crisis has been addressed to some extent with last night’s announcement of a $10 billion Australian Government guarantee to cover cyclone and flood damage across Northern Australia from July 1, 2022.
Billson says the scheme addresses some of the recommendations from the ABSFEO’s Insurance Inquiry and should make a difference for many small businesses that operate in flood and cyclone prone areas.
“This is certainly a welcome step in the right direction when it comes to ensuring essential insurance coverage is accessible to small businesses. Our Insurance Inquiry revealed that too many small businesses have been crippled by rising insurance costs and some can’t get it at all,” Billson said.
“A reinsurance pool will go some way to addressing this key barrier for small businesses in Northern Australia.”
Billson acknowledged barriers still exist for small business insurance coverage in other parts of nation.
“In the course of our Insurance Inquiry, we spoke to over 800 small businesses – about 12% of those were from Northern Australia,” Billson said. “That means there are still many small businesses out there experiencing difficulties with accessing necessary and affordable insurance coverage.”
Instant asset write-off to continue
The ombudsman has also described the continutation of the instant asset write-off as a big win for small business owners. Small businesses can continue to write-off the full value of assets purchased until 2023.
“This one-year extension of the uncapped instant asset write-off is a big win for small businesses. It gives small businesses more time and certainty to plan and buy major equipment. It significantly reduces the need for depreciation and cuts red tape.”
In further tax reform, the loss carryback provision will also be extended to June 2023.
“This is a tax initiative that effectively allows a small business to carry-back tax losses from 2022/23 income year to offset previously taxed profits as far back as 2018/19, to support business recovery.”
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