Tax cuts handled down in the 2016 Federal Budget have been largely welcomed by small to medium-sized enterprises.
A survey performed by SME specialists Reckon Limited showed at 44 percent of Australian SMEs saw the tax cuts as a positive development. Around one in five of businesses surveyed said that changes in the budget would affect them negatively.
This result is a significant change in opinion compared to Reckon’s pre-Budget survey which showed that 37 percent of SMEs expected new policies would negatively affect their bottom line.
“The increase in SME sentiment is very positive for the Australian economy,” Reckon CEO Clive Rabie said.
“We have seen previously that businesses felt their views on how to improve business conditions were not being heard. This budget marks the second SME-friendly package in the past two years and will deliver significant tax breaks, which directly challenges the perception that the government is not interested in small business.
“Australian SMEs are the engine room of the economy so it is hard to understate the importance of positive sentiment which is increasingly expressed by businesses at the moment,” he said.
Lowering of the tax rate to 27.5 percent from 28.5 percent for small businesses was considered as having the most positive impact, with 39 percent of survey respondents citing this as the most valuable improvement.
Extending access to instant write offs for equipment purchases was the second highest ranking result.
The budget is also expected to deliver further employment opportunities and job creation with 11 percent of SMEs reporting that, as a direct result of the new policies, additional staff hiring will be possible.
The changes to the youth employment program, Jobs PaTH, with a total of $750 million in support measures, could also boost employment amongst SME’s, with 21 percent of those surveyed stating they would consider taking on an intern or employing a young jobseeker as a result.
Treasury modelling shows that the projected cost of the Federal Government’s tax cuts will amount to $48.2 billion over ten years. John Fraser, the secretary treasurer, unveiled the cost in the Senate estimates hearing in Canberra today.