The recently released 2018 budget has garnered mostly positive responses from Australian SMEs, and shows that the government is taking steps to support small business interests. Primarily, the government is pushing to drive small business growth by enforcing fairness and promoting stability among businesses and with their interactions with the government.
For small business owners, there is a lot to take in. While not all concerns were dealt with, the budget seems to attempt to empower small businesses and to provide them with a more stable environment in the coming year. Taxes, cyber security, and black economy issues were all addressed, though much anticipated action on payment terms was noticeably lacking.
No legislative changes on payment terms
Despite the ASBFEOs recommendations, no legislative action has been taken to regulate unfair payment terms between large businesses and their small business suppliers. While these legislative changes haven’t been made, the government itself has implemented fair payment terms policies of its own, and significantly improved its payment times to its own small business partners.
Additionally, the Business Council of Australia created the voluntary Australian Supplier Payment Code in 2017. This is designed to highlight businesses that do offer fair payment terms, and to encourage others to improve their payment practices and join the code. It’s possible that the government interpreted this move as sufficient action toward improving payment times for SMEs, though many small business owners are still hoping for more concrete moves by the government.
Instant asset write-off extension
The $20,000 instant asset write-off is a measure that allows businesses to instantly write off the value of depreciating assets purchased at a value of less than $20,000 between July 1, 2017, and July 1, 2018. By taking this deduction, instead of depreciating assets at 15% per year, growing businesses can keep their taxes lower and invest more capital into growth more quickly and easily.
It was predicted that the government would let the measure expire this year, returning the write-off threshold to a much lower $1000. Instead, SMEs were pleasantly surprised to find that it has been extended until 2019. Proponents of the write-off have called for it to be made permanent as a way to give businesses a greater sense of certainty, though experts predict that it will be allowed to expire next year.
Further crackdowns on the black economy
The black economy has long undermined the competitiveness of honest businesses in Australia. Businesses that don’t properly report cash income, or who use more active and nefarious ways to avoid paying tax have a major unfair advantage over their competitors, often marginalising them or driving them out of business. Not only does this result in even greater criminality, it also directly interferes with the success of hard-working entrepreneurs. To deal with this, the ATO will be specifically targeting business sectors where the risk of under-reported income is highest.
The government has also banned cash payments of $10,000 or more in an attempt to shine a light on large and difficult-to-trace transactions, and announced tougher punitive measures for people involved in phoenix activity. Most significantly, the ATO is to receive the needed funding to ramp up its collection activities for tax and superannuation liabilities, making them better able to successfully track down people and businesses who are looking to cheat the system.
Continuing to push for better SME cyber security
Cyber security has long been a badly neglected, and incredibly expensive, issue for small businesses. A 2017 study by IBM found that the total consolidated cost of an average data breach was over $2.6 million. Despite this, most small business owners dedicate little or no time or resources to adequately securing their data to protect themselves or their customers.
This year, the government has re-emphasised its budget commitment to the issue, reinforcing funding for its Cyber Security Small Business program. In an effort to raise awareness among SMEs, the program provides $2,100 in co-funding for small businesses to have their cyber security tested, giving them an idea of how secure their data actually is.
This budget was definitely designed to promote the growth and stability of small businesses, and the response from the small business community shows this. While 30 per cent of respondents are unsure of the impacts that the budget will have, 42 per cent report being satisfied, and only 28 per cent claim to be “unimpressed”. Overall, this suggests relatively strong support from the business community for a budget that will help them to grow, and to bolster the Australian economy in 2018.