The budget, which was revealed at 7:30pm yesterday, sees an increase in the instant asset write-off threshold to $30,000, lower tax rates and an easier tax dispute service for small business, as well as other conditional plans that could benefit SMEs.
The new budget would mean that the instant asset write-off threshold would increase to $30,000; there would also be an increase in the availability and access to this for medium-sized businesses with an annual turnover of less than $50 million. This is aimed to help SMEs reinvest in their business, employ more workers and grow. It’s estimated that approximately 3.4 million businesses will be eligible for this new threshold.
SMEs could also benefit from the fast-tracking of the company tax rate cut. This is being cut to 25% for small and medium-sized companies, again with an annual turnover of less than $50 million. As well as this, the rate of the tax discount (also known as the small business income tax offset) is increasing to 16% by 2021–22.
A new dedicated Small Business Taxation Division would make it easier, cheaper and quicker for small businesses to resolve tax disputes, and this would sit within the Administrative Appeals Tribunal. The intended benefits include individual case managers, a lower application fee and faster decisions made.
There is also plans for improved access to both advice and finance, welcomed news for small businesses. As a 12 month pilot there would be 10 tax clinics established across metropolitan and regional Australia to provide free advice to assist unrepresented small businesses on tax issues and there would be a $2 billion Australian Business Securitisation Fund.
Invoicing would also be made much easier with a new e-invoicing system for Australia; this is estimated to save business a huge $28 billion in transaction costs over the next 10 years and increase opportunities with trade globally. This fits in with the announcement of creating a non-government organisation that would train SMEs on using digital processes as this increasingly becomes more of a necessity for companies.
There would also be a lot of red tape being cut for SMEs as the conditional plans would see a more streamlined GST reporting process through the reduction of the number of BAS GST questions. This could mean an easier life for around 2.7 million small businesses. A general reduction in financial reporting and audit costs, of more than $300 million over four years, will also be a welcomed benefit for small companies.