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2019 Federal Budget: The key take-outs for small business

Australia’s two million-plus small businesses can rejoice, with a number of sweeteners being promised in the 2019 Federal Budget, from tax cuts to an increase in the instant asset write-off.

Here’s a break-down of five big-ticket budget items that will impact Australian small business owners.

1. Small business tax cuts

Previously promised tax cuts for small and medium businesses will be brought forward, with the tax rate dropping from 27.5% in the 2019–20 financial year to 25% in 2021–22 – five years earlier than planned. Businesses with turnovers below $50 million will be eligible for this tax rate.

2. Instant asset write-off boosted to $30,000

The small business instant asset write-off scheme has been lifted from $25,000 to $30,000. Small businesses with an annual turnover of up to $50 million are now eligible to receive upfront deductions on asset purchases up to $30,000, rather than depreciating them over multiple years. The expanded instant asset write-off scheme is available now until 30 June 2020.

Co-founder and CEO of designer fashion rental marketplace, The Volte, Kym Atkins says: “We are pleased about the asset write-off threshold increasing, and allowing businesses to help reinvest and grow their business. Tax cuts will mean many business owners will be breathing a sigh of relief, too.”

3. Small business exports encouraged

Small businesses looking to export overseas will receive a combined $61 million, over three years, in assistance to help spread the word about their products.

The Export Market Development Grants (EMDG) scheme will allow small businesses to capitalise on opportunities created by a raft of free trade agreements recently signed by the Federal Government.

Mike Rosenbaum, co-founder, The Sharing Hub and CEO of Spacer.com.au says: “Many founders have their sights set on overseas, and feedback from many who have already taken advantage of this grant is that it’s beneficial in helping Australian businesses compete on a world stage.”

4. Help with tax disputes

A new Small Business Taxation Division will be created within the Administrative Appeals Tribunal to improve decision-making processes and give businesses dedicated case managers. This will assist small business owners who wish to process a dispute with the ATO but would otherwise not have the resources or knowledge to do so.

The ATO will also be required to reimburse businesses in certain circumstances for reasonable legal costs involved in challenging an ATO ruling. This will allow small business owners greater confidence in challenging an ATO decision.

Sham contracting has also been targeted, with the Fair Work Ombudsman to receive $2.3 million in annual funding beyond the 2023 financial year to focus on this issue.

5. $2 billion Australian Business Securitisation Fund

The Australian Business Securitisation Fund (ABSF), which was announced by the Federal Government last year to help encourage lending to small business, has officially been established following Tuesday’s Budget.

This government intervention is a huge win for small businesses across the country, who have found it difficult to access funding from banks and traditional lenders.

The $2 billion ABSF will lower the cost of capital for non-bank lenders like Prospa and help deliver more affordable funding options to small businesses, at a time when their success is critical to Australia’s growth.

More information on the measures proposed in the 2019 Federal Budget can be found here.

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The information in this post is provided for general information only and does not take into account your personal situation. Nothing contained in this post constitutes advice or an endorsement or recommendation of any kind by Prospa. Any links to third party websites are strictly for informational purposes only. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from financial, legal and taxation advisors. Although every effort has been made to verify the accuracy of the information as at the date of publication, Prospa, its officers, employees and agents disclaim all liability (except for any liability which by law cannot be excluded), for any error, inaccuracy, or omission from the information for any reason, including due to the passage of time, or any loss or damage suffered by any person directly or indirectly through relying on this information.

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