Australian Small Business and Family Business Ombudsman Bruce Billson discusses the 2023-24 Federal Budget and small business with Selina Green on ABC Radio SA South East.
Selina Green
Small businesses have been placed in the winners category of the ABC’s federal budget coverage. So what relief will the small business operators out there get from the immediate pressures they face? Things like rising freight costs, rising energy bills, staff shortages, a global economic slowdown.
Well, let’s hear about how small businesses will win. I am joined this morning by the Australian Small and Family Business Ombudsman. Bruce Billson good morning and nice to catch up with you again.
Bruce Billson
Selina, great to be with you, and a shout out to the SARDI (South Australian Research and Development Institute) crew. They are doing a great job for your state and having some punks and peanuts do it to their research facilities is really disappointing. So our thoughts go out to the SARDI crew who have to navigate that annoyance.
Selina Green
Absolutely. So what do you think, ombudsman? Fair to call small businesses winners in general?
Bruce Billson
Look, there’s some good stuff in there. There are some points that really deal with challenges that are here and now for small businesses. They are the good stuff. There is definitely room to do a little more to energize the business into the future and really encourage that spark in small businesses. But there are some pretty credible measures in it for the here and now problems that many of the small family and farming businesses in the Southeast are dealing with.
The energy relief is, I think, quite timely. I mean, some may point to whether that’s enough given the size of the increase in energy prices, but it’s a $325 deduction on the electric bill, and small businesses are eligible for it. Interesting, in most states the states match it. That doesn’t happen in South Australia, so the level of support in your state in the South East region isn’t quite where it is for small businesses in most of the rest of the country.
There is some incentive for people to look at energy efficiency measures, you know, a bonus deduction that you can get if you electrify for example. kitchen equipment or for your dairy industry, methods of heating water and all that to support production. There is some encouragement there.
The immediate depreciation of assets. Now for your listeners who aren’t familiar with that, that’s where a business that’s had a profitable year and has money to maybe buy a new machine or a new piece of farm equipment or something that’s going to improve their productivity, actually can deduct from the value of this capital purchase from their profit and therefore reduce the profit, pay less tax. It’s an attempt to explain what an asset depreciation deduction is to people who aren’t fussy about accounting and balance sheet adjustments and all that.
It’s still there, but it’s come from a much more generous base. So in the past there was a much higher level of expenditure that could be dealt with in that way. It has come down to $20,000. So at least it’s still there, but it’s not as generous as it was. So these are some of the things that stand out as pluses in the budget for small and family businesses in the South East.
Selina Green
So I understand that the asset write-off threshold that was increased during COVID, I guess as a way of giving businesses a little bit of a helping hand, it’s now come back to more around what it was pre-COVID.
Bruce Billson
In the normal state, the immediate depreciation of assets is about $1000. Now under COVID, it was limitless at one stage, it was $150,000 at other stages. This measure has ended and instead of going back to the normal t$1000, it is now $20,000. So that’s an encouragement. There is also the added bonus of electrification and more efficient energy use. So that’s pretty good.
But the most important thing is that you have to be profitable and have the money to take advantage of it. And this is where some of the cost pressures many companies face means that it might be nice in theory, but maybe a little out of reach. But still positive.
Thinking about that cash flow problem though. For your listeners, for people who pay corporation tax and other installments to Tax, they usually increase from last year. They’re basically saying, oh look, you made X amount of dollars, here’s the tax you paid last year. We break it down into four, and you pay roughly the same amount each quarter upfront, like prepaying the expected tax. And then it is turned up to take into account various factors, expected growth in the economy, inflation and the like. Now, because it has been higher inflation, if nothing had been done the increase would be 12%. A lot of companies will say, whoa, I don’t have an extra 12% of profitability in sales in my company. Why am I paying tax as if I am at that level?
So the government said, look, that’s too much to ask. They have turned it back to 6%. So it should be a cash benefit for many of the small and family and farming businesses in the region.
Selina Green
Good to hear. I’m talking to Bruce Billson this morning, who is the Australian Small Business and Family Business Ombudsman, and we’re talking about what was in this week’s federal budget for those who run a small business. Speaking of tax, I understand that there has been a little bit of breathing room for the small businesses who are also a little behind on their tax bill.
Bruce Billson
Where there is more flexibility if a small business needs to adjust their tax return. And the most important thing for all your listeners, always keep in touch with the Tax Office, always keep your reporting and your installments up to date. If you have problems paying them, talk to the Tax Office about it. But don’t put anything in. Don’t go to the ground. Stop burying their heads in the sand.
Sometimes people will file a tax return that when the dust settles it may not be true. And there was a limit to how far you could go back in amended tax returns. So it has been changed. It used to be two years Selina and now it’s four.
But something to be aware of. In the budget, there are extra resources so that the Tax Office can, quite frankly, go a little harder to ensure that people pay their tax bills. And you know, we all want people to do the right thing. Good business pays off. They pay their taxes, they pay their staff properly. They pay their suppliers on time.
However, it is something that people will notice that there is an increase in revenue that the government is expecting and they are achieving this by giving more funding to the Inland Revenue to increase their compliance efforts.
There are also a few small cleanups around tax management and some internal audit options. So if you’re not happy with where the ATO lands, you can ask them internally to look at it again.
Not sure if this is for you? You can come to us at the Australian Small Business and Family Business Ombudsman and we offer a tax concierge service where we come together with small and family businesses who may be struggling with the behemoth that is the Tax Office and need some help to navigate it.
Selina Green
Ombudsman, always great to catch up with you. A little unpacking there. Thank you very much for your time this morning.
Bruce Billson
Thanks Selina. Great to be with you.
Selina Green
Bruce Billson there, who is the Australian Small Business and Family Business Ombudsman. A great port of call if you’re running a small business and need a little hand navigating some of the minefields that pop up for those running a small business.
—————————————————-
Source link