With a huge $5.5 billion small businesses package laid out in the federal budget, MYOB CEO Tim Reed thinks it could just be enough to lift the nation’s enterprises to pre-GFC levels.
“We’re hopeful consumers respond well to this budget and keep spending. The small business sector relies on the discretionary section of the customer wallet. If consumer confidence falls, they’ll still pay the mortgage and the bills, but reign in discretionary spend. We are worried, however, that this budget is a big taxing, big spending budget – which means in time more work will need to be done to reign in both spending and taxes,” he said.
“Do we think this is enough to actually catapult businesses back to their pre-GFC levels? And I think there is a chance that we could do that.”
Reed pointed to two things business owners and entrepreneurs would respond to in the budget: the ability to fund their own businesses and get started, and feeling appreciated and supported.
The nation’s small businesses are already figuring out what they should write off first. But MYOB CEO Tim Reed says it is this ability to be able to write off up to $20,000 upfront investing in their enterprises which he said makes the 2015 Budget “phenomenal”.
“Small businesses always have a challenge investing in their business because they have to fork out the cash for their investment upfront, and aren’t able to get the tax deduction until further down the track,” he said.
“It will encourage existing businesses to invest and it will encourage more people to start a business.
“The $20,000 accelerated/increased depreciation allowance for small business is simply great news for people who want to back themselves. This move will stimulate small business investment, bring forward planned hires and drive an increase in productivity.”
The reductions in company tax rates for small business was also another leg up which Reed said would help his accounting-software company’s customers. The ability to apply it to an individual, while complex, is one way the government has ensured all small businesses will get the tax break.
“The 1.5% cut to company tax for small business (and equivalent concessions for non-incorporated businesses) is good as it will encourage more people to start a business but does so by adding complexity to an already confusing system. We’d prefer to see a lower, across the board, company tax rate,” he said.
Changes to Fringe Benefits Tax and the ability to write off professional fees when establishing companies are elements of the budget which Reed saw as a measure which will help small businesses.
“All-in-all you’ve got to step back and say ‘wow’ because this is a pretty amazing result,” he said.
However, it isn’t all rosy. Reed says the complex nature of GST and arduous reporting remains.
“Unfortunately running a small business will still involve long, frustrating nights for owners as the additional reporting and red tape kicks in. We’d now like to see more work to make it simpler to run a business,” Reed said.
“If our small business sector is to flourish, we can’t shy away from taxation reform. With the taxation review well underway, the government needs to lead the way in creating a simpler, more effective taxation system. The current system is stifling business and must change.”
More Budget Coverage:
- AT A GLANCE: All the big items in last night’s 2015 federal budget
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- ANALYST: The budget ‘hung the economy out to dry’ and more rate cuts are needed
- This debt chart shows the Abbott government squibbed the tough decisions in the budget
- 31 things you need to know about the federal budget
- Here’s what Australia’s startups think of the stimulus plans in the federal budget
- All the government programs that have been cut in Australia’s federal budget
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