Leaving the corporate world to start your own business can be daunting enough. But choosing to embark on a new career in the high-growth, fast-paced and innovation-driven technology startup scene is a whole other ball game. For many, it’s exciting and every day is a learning curve with new opportunities to grow or pivot your Read More…
A permanent $20k tax write-off for SMEs would help arrest government distrust says MYOB CEO
Mon 8 May 2017 - 11:33 amCashflow | Featured | Finance | News | Small Business | Tax
Ahead of this week’s Federal Budget, two-fifths of the small business community are not confident of a favourable outcome, according to research undertaken by accounting software provider MYOB.
Dynamic Business asked MYOB CEO Tim Reed to unpack the findings of the company’s SME Snapshot, a monthly survey of small to medium businesses from its customer base, to reveal what business owners want from the Federal Budget
Finding: 43% of SMES are not confident the Budget will deliver a positive outcome
Reed: This statistic reflects the current sentiment of SMEs in the wake of a recent crackdown on small business owners by government departments and authorities– specifically, the cash economy, work-related deductions and R&D tax claims.
Finding: 65% of SMEs trust the government to deliver the best outcomes for them
Reed: While this is a great figure, there has been a significant increase in distrust since last July’s SME snapshot, which found 27% of SMEs were not confident the government would pass positive policies for the SMEs sector in Parliament. This year, 35% have said they don’t trust the government to deliver the best outcome for them, showing distrust has developed slowly over time and will only continue if the government do not implement policies to give SMEs a more positive outlook for the future.
Some of the ways the SMEs have voiced that the Government could assist them is through the lowering of the company tax rate (48%) and subsidies for youth employment (42%) so that small businesses can focus on reinvesting their savings to growing their business.
Finding: The $20K instant tax write-off is the most pressing need, 60% of SME indicate
Reed: It is highly likely the government will face a backlash from the community if the $20K instant tax write-off for new assets, applying to SMEs with annual turnover of less than $2 million, is not made permanent. It has been a huge boon for growing businesses, enabling them to better match their cashflow with the need to invest in new assets. While the total tax paid overtime does not change, the write-off brings forward the deductions from investing in new assets, enabling SMEs to claim their expense in one lump sum rather than depreciate it over several years. This shows the government understands the aspirations of, and challenges faced by, growing businesses, and empathises with them.
According to Treasury data released by former small business minister Kelly O’Dwyer in December 2015, more than 99,000 small businesses made claims under the write-off scheme in its first six months of operation between July and December 2015. Small businesses claimed a total of $418.5 million under the scheme between July 1 and December 15, 2015. This compared to a total of $250 million claimed against the instant asset write-off scheme by 78,000 small businesses at the same time the year before when the depreciation limit was much lower at $1000. So, we know it’s welcomed by SMEs and is a great initiative in the right direction, and we encourage the government to make this policy a permanent fixture to help SMEs kick-start their growth.
Finding: 42% of SMEs want Government subsidies for employing young Australians
Reed: Young Australians are an increasingly valuable talent pool for SMEs as millennials are set to define the future of the Australian workforce. We should encourage and do what we can to create opportunities for the younger generation. A youth subsidy would encourage the small business sector to look to a younger talent pool, ultimately upskilling our emerging workforce. With more youth encouraged into the workforce early on, this can only be beneficial for the economy and the Government should recognise this.
Finding: Asked if Labor would deliver better budget outcomes for SMEs, 49% disagreed
Reed: Small and medium sized businesses were the winners of Treasurer Scott Morrison’s 2016 Budget. Despite the current sentiment towards the Government, the 50/50 spilt demonstrates the business community still have confidence the Government will use this year’s budget to back small businesses and cement their future in Australia- we are hopeful this will be the case.
- July 30 2020 Startup investment continues to rise in 2020
- July 29 2020 Let’s talk: Technology and business
- July 28 2020 Founding a startup during a pandemic: Advice from UNSW founders
- July 23 2020 Collaboration marketing: A great option for covid-affected budgets?