Federal Budget to boost small business

Small businesses will receive some much-needed support from this year's Federal Budget, with a number of tax concessions aimed at improving business cash flow to be introduced as of 1 July.

Under the proposed changes, businesses with losses of up to $1 million will be able to offset this amount against previous years' tax, at a potential benefit of up to $300,000 per year. The dollar value of claimable expenses has also increased. The budget has allowed for businesses with a turnover of less than $2 million to immediately claim deductions of up to $5000 for work vehicles, as well as individual business assets of $6500 or less. 

Increases to the tax free threshold for consumers earning less than $80,000 a year are also expected to benefit sole traders and those involved in a trust or partnership, who account for approximately 1.4 million small businesses.

According to Treasurer Wayne Swan, the changes are expected to assist around 2.7 small businesses, and are aimed at prompting investment and growth among sectors not participating in the boom.

"These new initiatives will businesses when they need it - providing an injection of funds to invest in new ideas, equipment and markets. So a café on a tourist strip can get the funds they need to refurbish or keep on valuable staff, so they're ready for when conditions pick up. Or a small manufacturer can get the funds they need to retool, so they can get through the tough times and make the most of opportunities sitting just over the horizon."

"We estimate this will help around 110,000 businesses over the first four years, providing cash flow when it is needed most, rather than down the track."

The small business tax incentives were introduced alongside stimulus measures for low-income families, which many small business owners are hoping will prompt cautious consumers to spend in the coming year.


Small business benefits in a nutshell...

  • Introduction of a loss carry-back program to help businesses return to profitability through a tax benefit of up to $300,000 per year
  • Increase in instant asset write-off threshold to $6500
  • $225.1 million investment in the Jobs, Education and Training Childcare Fee Assistance program run by Centrelink
  • $101 million in new skills measures to improve quality of employees and to support mature age workers



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