28th March, 2019
Small business advisors in the accounting and bookkeeping industry are watching closely for signs of relief in the upcoming Federal Budget. Here are the most talked about areas of concern.
Every year the business community pauses to watch as the Federal Government of the day unveils their budgetary plans.
This year, unlike many previous, the Federal Budget will be closely followed by a Federal Election, which will likely pull some attention from the Budget to Labor’s Budget Reply in the subsequent days.
It’s also expected that the Morrison Government will be using the budget surplus as campaign fodder, which may mean some tactical tax breaks either at the personal income level or perhaps even small business owners.
Which leaves the wants and desires of business advisors pretty much in the same three categories they usually are:
In 2018, The Pulse discussed what accountants were hoping to see in last year’s budget, with the Institute of Public Accountants (IPA) Senior Tax Advisor Tony Greco painting a pessimistic picture when it came to wholesale tax reform.
“Everybody wants a sugar hit come budget time, but you need to stand back and ask whether our tax system is fit for purpose,” said Greco.
“The answer is no.”
As we reported at the time, both IPA and Chartered Accountants agreed that the budget is an opportunity to kick off discussions on big-bang tax reform, but the political climate means it’s unlikely to happen.
Broadly speaking, they were proven correct when Federal Budget 2018 was handed down, as little in the way of wide-ranging reforms was tabled. And, of those initiatives that were, few have been passed into legislation.
More recently, we spoke with Certified Consultant Debra Anderson* of Anderson Tax & Consulting, who told us that the most valuable thing this year’s budget might offer is certainty.
Anderson said that if last year’s Budget is any indicator, there may not be much to be had in the way of increased certainty, despite it being of critical importance.
“I think the issue here is that even if it’s in the Budget, that doesn’t mean it will get through to become legislation,” said Anderson.
“We still have quite a few of the 2018 Budget initiatives that have yet to be passed and the lack of certainty for SMEs and tax practitioners makes everyone nervous.”
In particular, Anderson highlights the case of last year’s ‘superannuation amnesty’, which would have been a significant windfall for SMEs looking to clean up their books ahead of the introduction of Single Touch Payroll (STP).
“This was a great opportunity for SMEs to clear their super obligations and start STP with a clean slate, but it now looks like it probably won’t be passed at all.”
The introduction of a $20,000 instant tax write-off for small businesses was extremely well-received when it was first introduced and has continued to be very popular among small businesses and their advisors.
Last year’s budget included a desire to increase this write-off to $25,000 and extended into 2020, but as accountant Chris Loftus at Carbon Group recently told us, this is another piece of legislation that’s yet to pass.
“The small business immediate write-off has been proposed to increase to $25,000 by the federal government in January, so will have to keep an eye on that in a few weeks’ time,” said Loftus.
Anderson believes the write-off could stand to be increased even further if it’s to become truly useful for SMEs.
“Most SMEs would appreciate this becoming a permanent SME concession and also being increased to at least $25,000 but preferably $50,000 in order to maximise the benefits,” said Anderson.
Regardless of what else happens on Budget Night, the small business instant tax write-off will be among the major buzzwords guaranteed to get ears pricking.
“Budget 2018 introduced changes such as the Low and Middle Income Tax Offset, which puts a maximum of $530 back into the pockets of some of our clients,” said Loftus.
“The upcoming budget is touted as being one that will deliver further personal income tax cuts to households.”
But while these cuts are helpful and may well stimulate more spending from the general public, SMEs and their advisors are holding out for something more relevant to them, says Bookkeeper at Business Simplicity and Founder of Bookkeepers Support Kelly Berger.
“I am looking forward to the proposed tax cuts coming in, but I would also like to see further tax cuts for small business, more grants and funding as well as more subsidised training being made available to small business owners,” Berger said.
*Debra Anderson’s comments as provided are her own and do not necessarily reflect the views of any affiliated group or organisation.