The Business Growth Fund is a new bid to free up equity investment for SMEs with encouraging growth prospects – in theory, this will mean access to cash without the need to give up a controlling stake in your business. Based on UK and Canadian models, the idea is for government to partner with banks and super funds to inject equity capital into the new fund, kicking off with $100 million in public money for a projected total of $1 billion once matured. The Business Growth Fund will then invest in Australian small business, with equity taken by the private sector capped at 40%. This is a long way from being up and running, but details should be available from Treasury as it rolls out.
Plans for the Business Securitisation Fund are a little more advanced, with legislation passing in the final days of the last parliament. This fund aims to invest up to $2 billion in the securitisation market, providing extra funding for smaller banks and non-bank lenders to on-lend to small businesses on competitive terms. In theory, this will provide more market options for those seeking small business loans outside the big bank system.
The much-hyped instant asset write-off scheme has been a key small business talking point for government since its pre-election budget. As it currently stands, this allows medium-sized businesses to instantly write off assets up to $30,000, rather than report depreciation over time. These rules apply for new and second-hand assets acquired by businesses with a turnover up to $50 million and are in effect till June 30, 2020.
Some reports suggest many businesses don’t know how to access the scheme, don’t have the cash to participate or haven’t heard of the policy yet. Put simply, it’s an opportunity to purchase work-related equipment and write it off all in one go at the end of the current financial year, in effect lessening your business tax burden. This could apply to vehicles, IT hardware, tools and machinery, office furniture, air-conditioners and just about any other requirements. A tax accountant will be able to advise on details and whether your business qualifies for the scheme.
Apprenticeships and training
The government has pledged $525 million to what it’s calling the Delivering Skills for Today and Tomorrow package: changing up the vocational education sector and incentivising small business to take on more apprentices.
Incentive payments doubled at the last budget. The government estimates this will support 80,000 new apprenticeships over five years.
Businesses will now be given an additional $4000 for each new apprentice in industries with skills shortages, such as baking, bricklaying, hairdressing, carpentry and plumbing: that’s $2000 after the first year of apprenticeship and $2000 on completion, on top of an existing $4000 employer incentive. Apprentices will also receive $2000 when they hit certain milestones. The Australian Apprenticeships portal has more information on the scheme.
Tax rates and advice
Tax cuts for SMEs survived the Senate last year, and the government is planning a further drop. The rate will go down from 27.5% in the current 2019-20 financial year to 25% in 2021-22 – bringing the cuts forward five years. This applies to businesses with a turnover less than $50 million.
In terms of how tax is administered, there are new initiatives. The government’s recently created tax concierge service aims to assist small businesses resolve tax disputes. Run by the office of the Australian Small Business and Family Enterprise Ombudsman, the service is designed to provide cheaper and faster outcomes for reviewing ATO decisions.
The government has also promised a 12-month trial of university-run tax clinics for small businesses and individuals, covering tax advisory work, reporting and filing obligations, debt and payment negotiations and any other ongoing issues. The ATO is tasked with overseeing the trial, though further details have not yet been announced.
Energy Minister Angus Taylor has been touting a plan for government to intervene in the market and enforce price regulation on some energy deals for small business. In theory, this could save individual businesses up to $1000 per year, though there are some caveats.
As it stands, the policy aims to end standing offers in states where they exist and set a new default market price through the Australian Energy Regulator. Businesses in currently regulated markets – as well as in Victoria, where the state government is already planning a similar scheme – will not benefit from the Commonwealth plan.
However, for those on standing offers in deregulated markets – around 20% of small businesses in Victoria, New South Wales, South Australia, South-East Queensland and the ACT – it may be worth negotiating with your power company once any legislation comes into effect.
This article does not necessarily reflect the views of Telstra or its staff. Information provided on this website is general in nature and does not constitute financial advice.