Small businesses win as popular supports made permanent
· Michael West
Millions of businesses feeling the economic pain of the Middle East crisis will get some of their tax back along with extra money to buy equipment to help them weather the storm.
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The two permanent changes were confirmed in the federal budget on Tuesday night by Treasurer Jim Chalmers as part of a broader $3.5 billion business tax relief package.
Those set to benefit include 2.7 million small businesses, who will be able to access both measures, and almost another 90,000 companies in line for tax refunds.
Small business owners turning over less than $10 million will be able to get the $20,000 a year instant asset tax write-off permanently from July 1.
Two supports for small businesses are being made permanent in the federal budget. (Susie Dodds)The scheme already allows them to buy equipment, furniture or vehicles, and is expected to slash compliance costs such as record keeping by about $32 million a year.
The second measure is the reintroduction of a two-year loss carry back for all businesses – including small businesses – turning over up to $1 billion a year.
The carry back allows a business to offset earnings losses against the past two years’ profits, giving them a tax refund.
The measure is expected to cost $2.3 billion over five years and will become permanent from July 1.
“It will be particularly valuable for established businesses that have been profitable in recent years but experience a temporary downturn,” the budget papers said.
The government is also introducing loss refundability to help start-ups grow in their first two years from mid-2028, while expanding tax incentives for venture capitalists to back young businesses from mid-2027.
And the maximum cap on expenses that can be claimed back under the research and development tax incentive will rise to $200 million, to encourage more onshore investment.
“We’re building a better tax system for businesses, with over $3.5 billion in new measures that lower taxes, to encourage investment and innovation,” Dr Chalmers said.
Small business owners will enjoy the $20,000 a year instant asset tax write-off permanently. (Darren England/AAP PHOTOS)The budget continues to target red tape and boosting productivity, with a goal of reducing the regulatory burden by $10.2 billion a year under a raft of measures across various portfolios.
These include, as previously announced, working with the states and territories to harmonise payroll tax, cutting paperwork, promoting electronic record keeping, and harmonising state retail tenancy arrangements and other laws to promote cross jurisdiction business enterprise.
“This is the broadest productivity push in a budget since the 1990s,” Dr Chalmers said.