The perennial question for all small business owners is: how will the latest Federal Budget affect their business?
Small businesses are a unique and specialty market sector that is prone to the vagaries of regulatory profits, losses and gains. So it makes perfect sense that small business owners approach the Federal Budget with a mixture of trepidation and excitement.
This time, it’s the 2021-22 budget. Reviewing the Federal Budget, it’s safe to say that the future looks bright for small and medium enterprises (SMEs).
In the words of the Australian Small Business and Family Enterprise Ombudsman, Bruce Billson: “The Federal Government’s 2021 Budget is a clear acknowledgement that small and family businesses are central to the nation’s economic recovery and future prosperity.”
The answer would have to be a resounding: Yes. That’s if the financial inducements and incentives from the 2021-22 Federal Budget are anything to go by.
Banking institutions suggest that small businesses were among the big winners in the latest budget.
The expansion and extension of government support in relation to expenditure and losses – particularly those small businesses still suffering from the COVID fallout – were most beneficial.
Billions of dollars were pledged to healthcare industries and economic support payments for out-of-work small businesses and employees during the height of the pandemic.
Another major benefit for small businesses is the government’s announcement that it is extending the SME Recovery Loan Scheme, which builds on the SME Guarantee Scheme.
The Scheme supports SMEs with an annual turnover of up to $250 million. For example, the Scheme offered JobKeeper payments as pandemic relief between 4 January 2021 and 28 March 2021, as well as flood damage compensation for any SMEs in eligible Local Government Areas in March 2021.
As part of this package, the Scheme includes an increased government guarantee of 80%, a higher maximum loan size of $5 million, and maximum loan term of 10 years with interest rates capped at around 7.5%.
The offers don’t end there. Borrowers may also receive repayment holidays of up to 24 months for approved products and services.
Tax cuts always provide welcome relief, especially for small businesses, which often operate in environments where every dollar counts. With this in mind, they’ll be pleased to know that the corporate tax rate for SMEs will drop to 25% on 1 July 2021, down from 27.5%.
Some small business sectors will be disappointed that provisions for loss carry-backs were not made a permanent fixture. For example, extra funding for new training, upskilling and apprenticeships will be particularly welcome for SMEs in sectors suffering skills shortages, such as IT and agriculture.
In addition, industry proponents say that extra spending on the digital economy would help SMEs to streamline productivity, improve cash flow by minimising administration and hastening payments, and reduce business operating costs.
It is widely known that the construction industry entered crisis mode with ongoing COVID lockdowns and their element of uncertainty amid an increase in stock and freight costs.
However, there is an upside. Indirectly speaking, SMEs serving the infrastructure sector should benefit from an additional $15.2 billion for a range of infrastructure projects. These include a new freight hub in Melbourne and upgrades to key highways and railroads around the country.
Need help to maximise your federal Budget business gains? Our speciality lies in assessing and planning how to make the most of the 2021-2022 Federal Budget’s offers for small businesses.
Valles Accountants are a small business, so we understand your innate needs better than anyone. As a boutique accounting firm, we offer more than 35 years of collective experience. From accounting to complete tax advisory services, we are expertly equipped to support small business owners across Australia.
Talk with us today to make the best-informed financial decisions for your small business — based on the benefits to be gained from the 2021-22 Federal Budget, and beyond.