With the federal budget just around the corner, we asked our Xero Small Business Insights panel about the business conditions that most affect them and the changes they hope to see for the future.  


Paul Lyons, Partner at WLF Accounting & Advisory: In the last few years we’ve seen major changes to superannuation, which can undermine clients’ and businesses’ confidence in the system. Last year, for example, the government imposed a $1.6 million transfer balance cap which limits the amount of super that can be transferred into retirement.

This led many of my small business clients to question where they should continue to invest their money in super funds – and ask what will happen to the rules and regulations next. I’d like to see the government leave superannuation alone, if not make tweaks to improve it.

I’m also hoping that the government extends the $20,000 instant asset write-off for small businesses in this year’s budget. It’s due to revert back to less than a thousand dollars on 30 June.

Cash flow

Simone Clark, founder of Butterbing: As a small business retailer, there are two things that impact my cash flow: the seasonality of our product (which I can forecast), and customers paying on time (which I can’t). Recently I’ve been working with the biggest company I’ve ever dealt with. They insisted on a 60-day payment term, they exceeded those terms, and then they asked for a discount. I prefer to work with small businesses where I’m not loaning them money because at least I can retain control.   

I’d welcome any measures that seek to alleviate that strain for small businesses.

Ben Dewson, founder of Holistic Security: I agree that cash flow is one of the biggest issues for a small business owner. Personally, we learned an expensive lesson when a client of ours went under, so we put very strict rules in place from that day on. We’ve been fortunate with prompt payments since, but when I joined the Xero Small Business Insights tour earlier this year, I saw that the many debtor days most small businesses face are ridiculous.  

Paul: When I look at what the government can do to assist the cash flow issue for small businesses, I come back to tax.

We’ve seen an ongoing reductions in the company tax rate, with the aim to try to get that to 25 percent. That’s really positive and something I’d like to see continue – if it can get through parliament. But individual marginal tax rates remain very high: in 2017, the top rate was 49 percent for example, and this year it’s 47.

If the corporate rate is reduced but individual rates remain high, when dividends are passed to the individual the gap between the franking credit and the marginal tax rate is higher meaning higher taxation for the individual on the dividends they receive.Then the benefits of reduced rates for small business owners become nonexistent. I’d like to see the government reduce those tax rates so that no matter what structure you trade at as a business, your tax rates are comparable.


Simone, role at/of firm: We’ve been growing quite fast as a business, so I feel like I’m eternally hiring people. When you bake, deliver, sell, and do your own books, it can be hard to find the ideal skill set. But that’s not my biggest hiring issue. We’ll soon hit the payroll tax threshold and that’s the one thing I don’t know how to deal with. It’s likely to prevent me from growing the business because if I choose to hire more people, I’d have to sacrifice my own income.  

Ben: I share the pain point of payroll tax. It just doesn’t make sense to me. The government wants us to build business and employ people, but it taxes you if you do. I can add more money to my call-out costs to absorb the higher tax. But how does a small business owner like Simone, who is competing on narrow product price points, move past that threshold and into growth? It can be a very hard space to navigate.

Paul: The hiring tax is different in each state – and we’ve certainly seen it hamper growth among our clients. Business owners typically say, “Why grow when I’ve just got to pay a percentage of my wage bill out to the government?”

Joanna Oakey, founder and director of Aspect Legal: We go through different periods in our practice, sometimes seeing a lot of hiring and a lot of firing. At the moment we’re not seeing a lot of either, which is interesting. We work to help business owners understand their obligations, but my personal belief is that employment could – and should – be a lot simpler where regulations and taxes are concerned. There’s so much red tape that a small business owner has to wade through simply to grow.