Many consider small businesses the backbone of the Australian economy, and with the new concessions outlined throughout last year’s Federal Budget, that idea is only expected to grow. The recent votes of confidence, newly added incentives, commitment to tech start-ups, tax breaks and small business loans have made 2017 the year for growth. Employers have a lot to look forward to this year, and those thinking of starting up have chosen a good year to do it.
Confidence in small and medium businesses (SMB) is currently at a record high according to the recent Sensis Business Index (SBI) survey conducted in January, showing an eight point rise to 46 on the SBI. Consisting of 1000 SMBs throughout the country, 61% claim to be feeling confident, while 15% per cent are worried.
With the recent reforms and concessions outlined in the Budget, many businesses will find access to more benefits than they had in previous years.
“Perceptions of the economy are now in positive territory for both the short and long term projections and this points to a strong year ahead,” Sensis CEO John Allan had to say.
From June 1, 2016, businesses with an annual turnover between $2 million and $10 million are now recognised as a small business entity. This reform entitles them to the company tax rate of 27.5 per cent, as well as a tax reduction of 2.5 per cent. Roughly 870,000 businesses are expecting savings of $295 million by the end of this financial year.
The turnover threshold for unincorporated small business has also been increased from $2 million to less than $5 million, including a further tax reduction of 8 per cent. Australia plans to increase this to 16 per cent in steps until 2026-2027.
Tax breaks leave employers with much more money that can be spent to improve their growth for the years to come.
Instant Asset Threshold
The Budget also introduced access to instant assets for equipment valued at $20,000 for businesses falling into the $10 million threshold. Employers are free to buy utes, vans, furniture, coffee machines, tools and anything else that their business may require. Ending June 30, employers only have a few more months to take advantage of this perk. According to Assistant Treasurer Kelly O’Dwyer, small businesses have made $800 million worth of claims since it was introduced July of 2016.
Small and medium business throughout Australia are taking advantage of better lending conditions, with the number of marketplace lenders and fintech providers on the rise.
Reducing the reliance on banks, marketplace lenders can be more flexible in their assessment giving businesses access to investors who are willing to lend to them directly.
“Marketplace lending addresses the concerns small business has with banks, and the needs for investors for stable fixed-income returns. Sophisticated investors are empowered to take control of their own portfolios, choose the risks they are willing to take, and effectively be the bank.” – Anthill Magazine
There is more good news for Australian small and medium businesses, with the Turnbull Government focussing on legislating a tax cut for businesses, which will be capped at $10 million.
The government’s 10-year enterprise tax plan, which includes reducing company tax from 30% to 25% will go to a Senate vote in March.
New incentives have made 120,000 intern positions available throughout the next four years. These placements will last 4 to 12 weeks with the intern working 15 to 25 hours each week. Employers taking job seekers for a position will receive an upfront payment of $1000, with the option to offer ongoing employment at the end of their contract.
On April 1, Youth Jobs PaTH will be introduced to young job seekers. This programme plans to train young people to effectively prepare them for potential positions. Employers will be free to hire well trained, young employees without the cost and risks associated with unproven crew members. These incentives allow small businesses new workers at the cheapest cost.
Investment in Tech Start-ups
The Australian Government has also devoted $1.1 billion to the National Innovation and Science Agenda. The goal is to commercialise and increase private investment. Tax concessions for early stage investors have also been introduced to support investment in these firms.
Scott Morrison has come out in support of financial technology (FinTech), stating that it could transform our economy.
“As Treasurer I want to help create an environment for Australia’s FinTech sector where it can be both internationally competitive and play a central role in aiding the positive transformation of our economy,” he said in a recent report.
Technology start-ups are gaining popularity in the Australian economy, making it a great time to jump aboard.
The Australian Federal Government put a lot of their eggs into small businesses as shown through the release of the Budget last year. The economy is in a great state at the moment, and surveys show that tax breaks, concessions, and new incentives have instilled a great level of confidence into small business owners.
About the Author
Charles Baily writes about small business and the Australian start-up scene from personal experience. You can connect with Charles on Twitter if you would like to gain more insights.
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