What can I say about Mr. Swans 3rd Budget Speech, besides the fact it was no Sex & The City 2 (i.e. thrilling)? Instead, we got a very conservative announcement, to say the least. The good news was there were no real surprises. No ‘effective from 11.00pm EST on the 11 of May 2010’-type announcement (with the exception of the Capital Gains Tax which is effective from 7.30pm 11 May). No surprises means we can stick to our business plans to grow our businesses. It is also assuring to think that we as a Country could be out of the RED within three years. This is good news – we do not wish to go down the path of Greece. Mr. Swan has forecast that the economy will grow by 3.5% in 2010/11 before reaching 4% growth by 2011/12. Now, although that is a good growth compared to the rest of the globe, can I make a suggestion? Do not let these rates stop you from aiming for double digit growth within your business. With this growing economy we will also see unemployment fall to 4.7%, meaning that as business owners we need to focus on our businesses being the place of choice for new team members. We need to focus on being leaders to attract the right staff, as lower unemployment rates often do lead to greater difficulty and employment costs to business owners. There were no sensational handouts to business owners as in past budgets. We did though manage to get a few scatterings of very very small pearls, but also some disappointment as follows:
- Immediate claim for GST Paid on assets financed via Hire Purchase Agreements for Small Business that account for GST on the cash basis. In the past GST could only be claimed on each monthly repayment.
- The Government will spend $125.2 million during the next four years to establish a single national register for business names. This will result in business owners not needing to register business names in each state and territory, as well as making searching for trademarks, providing licensing requirements and monitoring your business registrations easier.
- $660 million will be allocated over the next four years in improving skills and job creation, with 39,000 new training places been made available in industries suffering from skills shortages along with support for 22,000 new apprentices. Not sure if this goes far enough as no additional support to encourage employers to employ untrained workers and train on the job.
- $2.7 million will be injected into services to support businesses to be able to access early intervention dispute resolution services that operate under the Franchising, Produce and Grocery Industry and Horticulture and Oil Code of Conduct, reducing businesses legal costs to resolve disputes.
- The Recreational Boat Building and Film Industry will also get some boost from this year’s budget but will be subject to public consultation and will require states to be in agreement.
- Raising the effective tax-free threshold to $16,000 from 2010/11.
- A 50% Tax deduction on the first $1,000 of interest earned on deposits, debentures, annuities and bonds from 1/7/2011. All the small business owners with savings put your hands up. I suspect we all pay interest rather than earn it. Well the gesture was there we cannot complain, can we?
- The Medical expense tax offset goes from $1,500 to $2,000 before you can qualify for the 20% offset.
- Taxpayers will also be able to opt to accept claiming a flat $500 from 2012/13 and $1,000 from 2012/13 for work related expenses without having to produce receipts or the need to use a tax agent if all they have is salary and work related expenses. This is good news for taxpayers, not so good for H&R Block and ITP.
All up though not the fan fare of fashion week, no shockers either. The only thing to hope for now is that the Resources Tax passes through the senate. Coming out of the red is heavily reliant on that extra revenue. For a more detailed analysis of this year’s budget, please contact us.
