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Federal Budget to provide a boost to small business

Treasurer Josh Frydenburg handed down the 2021 Federal Budget which included a number of measures aimed at boosting retailers, manufacturers and small business.

The measures have been widely welcomed by industry bodies, who say they will provide solid foundations for small businesses to recover in a post-COVID era.

The budget delivers substantial benefits for small business owners in five key areas, namely: business tax relief, simplifying compliance with Australia’s IR laws, encouraging continued investment in digital commerce, and creating a national agency to accelerate recovery from ever-frequent natural disasters.

Tax relief for SMEs and a boost to spending

The budget included a tax reduction for small businesses from 1 July. Additionally, a 12-month extension to the temporary full expensing measures until 30 June 2023 and a one year extension of the temporary loss carry back will allow businesses to invest in their future.

Peter Strong, CEO of the Council of Small Business Organisations Australia, said the tax relief measures would help small businesses to rebuild their cashflow reserves.

“But it is a little disappointing that these budget tax relief measures do not extend to sole trader businesses, particularly the significant number of sole trader businesses that employ staff. We would have rated this budget an 8.5/10 had the Government not left out sole traders,” added Strong.

More than 10 million of Australia’s low and middle income earners are expected to benefit after tax returns are filed at a cost of $7.8 billion.

The decision to extend the Low and Middle Income Tax Offset is worth up to $1080 for individuals and $2160 for dual income couples.

NRA CEO Dominique Lamb said the measures aimed at boosting customer spending and encouraging business investment are welcome additions.

“Extending tax cuts for low and middle-income earners will mean that everyday Australians will now have more disposable income to spend at the shops, providing an adrenaline boost to retailers bottom lines,” Lamb said.

ARA CEO Paul Zahra said the procedural changes could save small businesses significant court and legal fees and were an important first step to provide small businesses with flexibility if disputing debt recovery actions by the ATO.

“The provision of an appeals process is an important change for small businesses, who can avoid the expensive court system, which is prohibitive for many who would seek to contest ATO debt recovery actions,” Zahra said.

“These changes are a crucial first step in providing small retailers with a defence against ATO debt recovery actions, which can leave it almost impossible for them to operate after actions have been taken.

“Retailers have had mixed fortunes during the post-pandemic recovery, with struggling CBD and tourism-dependent retailers needing ongoing support. These business owners need to be supported as they seek to rebuild without the added pressure of expensive ATO disputes.

“The ARA congratulates the Treasurer on the changes, and we look forward to continuing to work with the Federal Government to ensure small businesses are in the best possible position as they build towards a recovery.”

Simplifying compliance with Australia’s IR laws

The Federal Budget has allocated $134 million over four years on its deregulation agenda, including investing in regulatory technology (regtech) to support smaller employers comply with modern awards, provide data on pay and conditions and help with accuracy in payroll software.

COSBOA’s Strong says that this investment in regtech is both welcomed and overdue.

“We look forward to working with the Morrison Government to maximise the value of this much-needed investment in IR compliance to ensure it provides tangible value to Australia’s two million plus small business owners,” added Strong.

The NRA also applauded the government for recognising the complexity of the system and taking steps to improve compliance.

“Most people outside the sector think we’re exaggerating when we say that since 2013 retailers have had to deal with nearly 14,000 different rates of pay depending on variables such as whether the employee is casual or permanent, their age, their classification and the times at which the work is performed. This number easily doubles if you consider shift workers, baking production employees, apprentices and those working under the supported wage system,” Lamb said.

“We look forward to working with the Morrison Government to ensure Australia’s small business owners are well-served by these measures.”

Investing in digital economy

The Federal Budget has allocated $1.2 billion to building Australia’s digital future through the Digital Economy Strategy, a move that has been widely welcomed by the industry.

COSBOA’s Strong said that prior to the pandemic, investment in digital services and systems was not a high priority for Australia’s small business owners, but the pandemic shifted that.

“The pandemic physically removed customers from our shops and so we had to quickly pivot to connect with them digitally. The new funding to support small business investment in building their new-found digital capability and skills is very positive,” he said.

NRA’s Lamb agrees, saying: “People spent 2020 predominantly at home, shopping from the comfort of their living rooms and couches. While we’ve certainly seen spending in-store return to normal in many parts of the country, it’s now the time to invest in the digital economy.

“Particularly coupled with incentives for entrepreneurs, investment in digital skills is a great move for retail. Many entrepreneurs, a significant percentage of these being women, start their businesses with their laptop. Investing in digital skills and infrastructure will give more retailers the opportunity to start, and boost, their business.”

Focus on women in Federal Budget a good start

The Australian retail industry continues to be a key employer of women, providing a variety of opportunities in both sales, and non-sales roles. Measures aimed at providing economic security for women are a welcome sign of progress towards equality.

“Certainly, the access to childcare subsidies will give women the freedom to create their own businesses and participate economically. Removing the $450 per month threshold under which employers are exempt from paying employees, predominantly women, will also provide certainty for these women as they look towards retirement. It’s of paramount importance that Government, and retailers, continue to work towards equal opportunity in leadership opportunities,” says Lamb.

Supporting the timely recovery of SMEs for future natural disasters and pandemics

Over the last 18 months, Australian communities – and the local businesses that support them – have been hit by floods, bushfires, ice storms, a global pandemic, and floods. 

While the first response of the nation’s emergency services has been outstanding, one of the more disappointing aspects has been the delay in the provision of the financial and other support from government agencies to small businesses.

“While the announcement of this funding is a positive step, we hope that the Morrison Government ensures that the experiences of SMEs in the wake of the national disasters are captured in the design of the processes and systems to be developed for this vitally important agency,” says Strong.

“This is a positive budget for small business. The potential value of these four measures will only be realised if the various agencies charged with their implementation work closely with the small business community.

“COSBOA and its members are up for this challenge and look forward to working with the Morrison Government to build on the very positive foundations that have been set out in this budget.”

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