Over the weekend, after a week-long wait for an outcome, the Coalition lead by Malcolm Turnbull formally claimed victory of the 2016 Australian election. As the dust clears, and life returns to business as usual for the nation, many small business owners are left wondering “what’s in it for me?”
In fact, there are many policies of the new government that are worth small business owners keeping an eye on. With a definite election outcome now known, here’s what small business owners can expect over the next four years.
The first thing many small business owners are interested in knowing is what the tax implications of the election outcome will be. In their Ten Year Enterprise Tax Plan, the Coalition has promised they will cut the small business company tax rate to 27.5 per cent for small businesses with a turnover less than $10 million. The company tax rate will be progressively lowered to 25 per cent by 2026-27 for all companies.
They also pledge to increase the unincorporated tax discount from 5 per cent to 8 per cent, capped at $1000 for small businesses with a turnover less than $5 million.
Also under the Ten Year Enterprise Tax Plan, asset deduction parameters will be extended. At present, businesses with annual turnovers of less than $2 million can write off assets under $20,000 until June 2017. The Coalition plans to extend access to this deduction scheme to include all businesses with a turnover of up to $10 million.
The Coalition government has expressed they will not be writing a submission to the Fair Work Ombudsman in support of penalty rates. Therefore, there is a possibility small businesses will have changing obligations when it comes to employee penalty rates over the term of the Coalition government.
Start-ups and Innovation
In 2015, the Coalition launched its four-year $1.1 billion National Innovation and Science Agenda. The agenda includes:
- Providing a 20 per cent tax offset to investors who invest in start-ups
- Committing $11.2 million to establish global hotspots where Australian entrepreneurs can access collaborative workspaces and networks to improve their skills and attract foreign investments
- Improving employee share schemes in the hope that business can attract higher calibre staff
The new government supports the fibre-to-the-node NBN model, which connects fibre cables to neighbourhood nodes, then uses existing copper wiring to deliver the NBN service to homes and businesses. This is a more cost-effective approach; however, it is widely suspected this will result in slower internet speeds.
Business Activity Statements (BAS)
The number of annually required Business Activity Statements will be reduced from seven to three, in order to help small business owners save time and improve efficiency. As previously mentioned, the government also promises to simplify the process for establishing an employee share scheme, which they anticipate will involve the removal of approximately 450,000 small businesses from the PAYG system.
Youth jobs PaTH programs
Under a Liberal-lead government, the Youth Jobs PaTH program will be introduced, designed to encourage young people to undertake internship placements as a means to secure permanent employment. The implication of this scheme for small businesses is they will be able to legally employ young people at a cheaper rate, with a tax incentive to become involved in this program.
Protecting vulnerable workers
The Coalition will be appointing the first-ever Small Business and Family Enterprise Ombudsman under their new government. Overall, the Coalition is committed to strengthening the power of the Fair Work Ombudsman, particularly through compelling employers to produce information and answer questions about employee salaries.
Under the Coalition government, a higher penalty category is being introduced for businesses found to be exploiting their employees. This means there will be much higher penalties for any business underpaying staff regardless of their size.
It’s worth keeping in mind these policies are election promises, and because of the unfriendly senate (the Liberal party does not have a majority in the senate) some of these policies will be difficult to pass. Regardless, it’s important for small businesses to anticipate the coming changes and be prepared to alter their processes accordingly.
If you’re looking to improve the way your small business records and interprets financial data, sign up for a Reep free trial. Reep gives you a live snapshot for your business while providing the ability to plan for the future. You can plan for any business scenario from anywhere, any time.