Budget 2017: Better days ahead but little for small business to shout about

Here’s 10 small business impacts you need to know now.

1. $20,000 instant asset write-off extended

The $20,000 instant asset write-off scheme stays for another year. Improve your cash flow and deduct the value of eligible assets straight away, instead of over several years.

To do: Take advantage of the scheme on eligible purchases before it changes back to $1000 from 1 July 2018. For example, small graphic design agencies might upgrade their design software and computers, while café owners may upgrade their coffee machines, dishwashers etc.

2. Company tax rates on downward slide

The tax rate for incorporated small businesses drops from 30% to 27.5%, heading to 25% by 2026-27. The definition of ‘small business’ expands from $2 million up to $10 million turnover.

To do: Check in on your business structure with your accountant to take full advantage of changes.

Prospa tip: If you’re registered as a sole trader, you pay personal tax rates, not company tax rates. You get a tax-free threshold, companies don’t. Company tax applies to all income, but is less than the highest personal tax rate.

3. Sweetening the red tape deal

States and territories are being encouraged to cut small business red tape. Incentives will be offered over 2 years via the new National Partnership on Regulatory Reform (NPRR).

To do: Speak up. Talk to your elected representative at federal, state and local level about red tape giving you grief.

4. Foreign workers support Aussie apprenticeships

You’ll be hit with a levy if you hire employees on skill shortage visas (replacing the 457). A temporary employee sets you back $1200 a year. A permanent hire incurs a one-off $3000 fee.

The cash funds the new Skilling Australians Fund, supporting apprentices and trainees.

To do: Be aware of your visa responsibilities and look for opportunities to hire Australians. Look out for new apprenticeship incentives and schemes to help upskill locals.

5. Bigger consumer law fines

Increased penalties for breaching Australian Consumer Law are here from 1 July, 2018. Breaches can range from not replacing a faulty product, to putting customer safety at risk with dangerous goods. Companies are on the hook for up for $10 million, individuals for up to $500,000 .

To do: Know your rights and responsibilities and stay on the right side of ACL. Talk to your lawyer or business advisor to stay across these changes, or visit government websites like this one.

6. Capital gains rorts under the microscope

From July, they’re on the lookout for rorts of the capital gains tax (CGT) break on small business assets.

To do: Get financial advice if you plan to sell your business and claim CGT concessions.

7. Banks and multinationals feel the burn

The new Australian Financial Complaints Authority will manage banking disputes. It’ll push for transparency and enforce bigger fines for rule breakers.

A new levy on the Big 5 banks has disappointed the banking sector, with costs already flagged to be passed to customers.

There’s more money in the ATO coffers to get multinationals to pay their fair tax share.

To do: Wait to see if the banks pass on the extra costs. Know your rights when dealing with banks and consider moving to a smaller bank with lower fees and charges.

8. A regional leg up

Investment in regional transport infrastructure and remote and regional students boost access to regional businesses and opens up city markets.

To do: Keep your ear to the ground for new regional opportunities and government programs. Investing your time could grow your customer base.

9. Cash in customer pockets

Measures impacting the cash in your customer’s pockets:

• A one-off $75 payment for single parents and single pensioners and $125 for couples on pensions to balance power cost rises
• A tax hike from 2019 in the form of a 0.5% Medicare levy increase
• ATO crack down on ‘black economy’ cash jobs and undeclared earnings
• Students and graduates – higher fees and less time to pay it back
• Digital currencies like Bitcoin exempt from GST from 1 July.

To do: If your key customers are hit in the hip pocket, time for some analysis of how their compromised budget may affect yours. For example, if you run a café on a university campus, your student customer base might buckle down on coffee and lunch expenses.

10. Where we missed out

Missing from the budget papers:

• Support to communicate changes allowing the ATO to disclose small business tax debts to credit reporting agencies. Recent Prospa research found 80% of small business didn’t know the change was coming on 1 July 2017.
• The hot topic of payment terms. There’s nothing to address small business cash flow held to ransom by the big end of town.

To do: If you have a tax debt, communicate with the ATO. Reports are provided for debts over $10,000 more than 90 days overdue. Talk to Prospa about a loan to cover the debt and protect your credit rating.

Key to-dos

Get across your numbers and plan to make the most of the instant asset write-off – check eligibility before you start spending.

In a post-Budget haze, don’t forget other measures kicking in from 1 July, like new superannuation rules and simpler BAS reporting.