Almost 70 accountants and bookkeepers met this morning in Melbourne for a Xero-sponsored panel discussion on what the Australian federal budget means for small business. We covered changes to the instant asset write-off, grants for exporters, the luxury vehicle tax, Single Touch Payroll and new sources of lending for small businesses. Some key points are below, and you can watch the full recorded conversation at the Xero Partner Facebook Group
Tax cuts: “Clients will start to ask, ‘When will I see tax cuts?’” asked 5ways Group’s Paul Meissner. “The answer is not immediately. First, the proposed changes to low-income and low-middle income tax offsets would apply to returns lodged this July. The hurdle will be to form a government and pass legislation by then. It may be that we’ll have to lodge without legislation in place, then self-amend if the law passes. That’s the most immediate tax cut for earners under $126,000. The remaining tax cuts don’t kick in till 2024. Clients shouldn’t bank on these yet. We have three budgets and two elections between now and then. My message to my clients on tax cuts: ‘Wait for the legislation, I’ll tell you when it happens.’”
Luxury car tax: “Farmers and tourism operators who buy new vehicles on or after July 1 will be able to claim a maximum refund of $10,000, up from $3,000 currently,” said Lotus Accountants’ Kylie Parker. “This gain is thanks to changes in the luxury car tax, which was including some expensive utes required for farm use.”
Instant asset write-off: “While it’s not free money – it’s just a timing difference on when you get the depreciation – it does mean less red tape for clients,” said Meissner. “They don’t need to keep an asset register. But as others have noted, big spending on assets can shoot your profit. And businesses need to understand that can hurt their chances when they go to seek bank finance.”
Financing for SMBs: “There’s a securitization fund for $2 billion in cheap warehoused debt that new banks can then relend to scaling-up businesses,” said Sequel CFO’s David Boyar. “This is a massive opportunity given the estimated $80 billion shortage of credit to small and medium businesses. Advisors need to let their clients know there are alternative borrowing options to the big four banks and more expensive fintechs. If we can get more capital into the lending sector that’s fairly priced, it’s great news for people who are in the growth part of their business.”
Grants: “In the search for capital, too many startups give away valuable equity,” said Parker. “They’re unaware there’s often govt funding available.” The enlarged the Export Market Development Grants can support businesses’ digital marketing plans when they go overseas. And Business.gov.au has a useful search page of the grants that are available to small businesses.
STP: There’s $53 million for the expansion of Single Touch Payroll. Some of the money can be used to enforce STP, starting with employers who have 20+ staff. “Accountants and bookkeepers need to make their clients aware STP data will be eventually be shared with the Department of Human Services and Immigration,” said Meissner. “It may be time for a conversation with employers as to whether they have spousal payments outstanding or staff who may be working in breach of their visa.”
We discussed much more, so check out the full video to hear commentary as well from Xero Australia Managing Director Trent Innes Xero Head of Industry Matt Prouse, Little Village Creative Chief Carolyn Stebbing, and Xero Small Business Advocate Angus Capel.