Your small business accountant helping you figure out your small business entitlements
As ipa accountants we have discovered that once again another Federal Budget has been handed down with a raft of changes, some good some bad depending on your place in our economy. Ignoring the politics of why such changes are made, let's take a look at just a few of the measures that will have an immediate impact on small business.
For small businesses, the life blood of our economy, the promised tax cut for companies from 30% down to 29% has been scrapped and replaced by an entirely different system.
The loss carry back measure entitles small business companies, yes COMPANIES ONLY, to offset any taxable losses made in 2012/2013 against profits made in 2011/2012. In order to take advantage of this, you need to be trading under a company structure (all sole traders and trust structures miss out) and make a taxable profit in 2011/2012 followed by a loss in 2012/2013. This system works well, but by being restricted to companies and being implemented in a slow moving economy it is unlikely to drive small business growth and prosperity and subsequent jobs growth for the long term. Predictions are that only 110,000 small businesses out of a total of 2.7 million in Australia are expected to benefit.
The ability for small business (defined as gross turnover under $2 million) to fully expense assets costing less than $6,500.00 is a welcomed move for small business. It will encourage small businesses to invest in new equipment and receive the tax benefits in the same tax period that the cash outlay is made. This is on top of the previously announced $5,000.00 instant write off for new motor vehicles purchased post-1 July 2012.
The ATO GST compliance program has also been extended, with the budget allowing for an extra $195.30 million dollars to fund GST compliance activities. It is incumbent on new small businesses to get the right advice on GST matters before establishing any new small businesses. GST audits can be stressful, painful and often expensive for small businesses so plan to meet with a trusted small business accountant if you have concerns.
Thankfully this budget also sets aside $8 million for a Small Business Commissioner to represent small business. Let's hope that whoever gets appointed is independent, has the ability to listen to small business and suggest improvements to our nations governance that actually get actioned by Governments brave enough to listen.
In order to support start up businesses in the trades, $19.4 million has been allocated to train trades people on starting their own business. A much needed $5,000.00 for recently qualified trades people to receive business skills training will allow trades people to be better informed about their obligations prior to taking the leap into small business.
There are numerous other changes to LAFHA, Capital Gains Tax and superannuation that will also impact on small business, but most of these measures seem targeted at higher income earners and foreign residents.
Let's hope that the stimulus to the economy that will come from additional family tax benefits, increased payments to those on Centrelink benefits and tax cuts to low income earners flows through to local small business, desperate for an immediate boost from this budget. It seems that the issue of long term tax reform for the benefit of small business will have to wait for another time.
For any further questions on how this may affect you please contact us, your small business accountant in Surry Hills.