The Abbott Government has released its first Federal Budget and while the media this morning is focusing on the cuts to health and education and increased taxes, what does the budget mean for small business?
Here’s what we know so far:
Overall, commentators seem to agree that the Budget is attempting to set the Australian economy on a journey of long-term, sustainable growth through budget constraints and infrastructure spending.
However, there are impacts on small business including:
The company tax rate will drop from 30% to 28.5% from 1 July 2015. However there is some confusion as the budget papers only list this item as a contingency reserve, meaning it may be tied to getting legislated cuts through Parliament.
This tax saving, if it eventuates, may be swallowed up by the 1.5% debt levy for companies with taxable income over $5 million. Note however, this levy (to pay for the Parental Leave Scheme) is also left out of the budget and included in the contingency reserve. This may reflect the political difficulties of getting the Paid Parental Leave (PPL) though Parliament in its current form. Therefore the status of the PPL and the company levy are not clear this morning.
While the 2% levy for individuals with taxable incomes above $180,000 may seem like a high salary, commentators suggest it will affect small businesses run as partnerships or sole traders where friends or partners run a business together and re-invest their profits into their business.
Currently capped at 38.1 cents a litre the petrol excise has been reindexed, meaning this tax will be increased in line with inflation, possibly twice a year.
Compulsory employer super contributions will rise from 9.25% to 9.5% from 1 July 2014 but are frozen at that level until June 2018 when they will rise by 0.5% each year until they reach 12%.
And of course, the cuts to health, education and family payments will impact small business owners, like everyone else, and may impact on consumer confidence.
Some good news?
A $10,000 wage subsidy over two years, for employers who take on staff aged 50 years and above (pro-rata for part-time staff).
The government has allocated $2.8 million to develop procurement guidance for small business to ensure they are not disadvantaged in tendering for government projects.
There is a budget allocation to deliver on small businesses getting the same protections as consumers when it comes to unfair contracts imposed by larger businesses.
There is $8m in the federal budget to turn the existing Office of the Australian Small Business Commissioner into a Small Business and Family Enterprise Ombudsman with extra powers and functions to act as a one-stop shop for small business interactions with Government.
What do you think of the Federal Budget?
