Shop local campaign
Australians are also now being encouraged to support small and family-owned businesses in their local areas, after the Federal Government set aside another $8 million to fund a nationwide ‘shop local’ campaign, according to a smartcompany.com.au report.
Small Business Minister Stuart Robert said in the report that the campaign will help support SMEs as they continue to recover from the economic effects of the pandemic.
The Council of Small Business Organisation Australia (COSBOA) received $5 million in funding to run the ‘Go Local First ‘campaign in 2020, with Treasury officials confirming to SmartCompany this new $8 million iteration is the next phase of the same campaign.
COSBOA’s ‘Go Local First’ campaign includes nationwide advertising and marketing materials that SMEs can download to display in their businesses. A series of webinars and other events were also held.
Minister Robert said small and family businesses are an important part of the government’s economic recovery plan and referenced a number of “tailored” small business measures, worth a combined $45.4 million over the forward estimates. The measures include this new campaign and the previously announced $12.7 million to expand the Digital Solutions — Australian Small Business Advisory Services program, according to the report.
The government will also spend $900,000 over four years to fund the Ahead for Business Program, which supports small business owners to take steps to improve their mental health.Federal government’s $8 million budget pledge boosts ‘shop local’ campaign
The Federal Government’s 2021 Budget has acknowledged that family businesses are central to the nation’s economic recovery and future prosperity, Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Bruce Billson recently reported.
Just some of the new incentives targeting SME’s in the new financial year include:
- $129.8 million to encourage entrepreneurship through the New Enterprise Incentive Scheme (NEIS) and Entrepreneurship Facilitators Program.
- $1.2 billion investment in the digital economy.
- $10 billion guarantee of reinsurance pool to cover cyclone and flood damage in northern Australia.
- $506 million extension of the JobTrainer program.
- $10 million on the small business deregulation agenda over four years.
- $11 million over three years for national recognition of occupation licences.
- Tax system small business reform.
- Small business company tax rate cut.
- $4.3 million to establish the Mandatory Franchise Disclosure Registry.
- $2.6 million to improve access and awareness of Commonwealth procurement opportunities
To encourage greater digital adoption by small and family businesses and ensure they are globally competitive, the Federal Government has pledged $1.2 billion towards enhancing the digital economy. The incentive is expected to help SMEs build digital capacity and drive businesses up-take of e-invoicing, Mr Billson said.
“$12.7 million will also be spent on expanding the Australian Small Business Advisory Service Digital Solutions Program to reach as many as 17,000 small businesses,” he said.
Tax system reform
Under new rules proposed in the budget, small businesses in dispute with the ATO will now get a fairer go, according to Mr Billson.
In a statement, Mr Billson welcomed the pledge to give the Administrative Appeals Tribunal (AAT) greater powers to pause or change debt recovery actions applying to a small business in dispute with the ATO.
“Small businesses disputing an ATO debt in the AAT will get a fairer go by stopping the ATO from relentlessly pushing on with debt recovery actions against a small business, while the case is being heard. The Government has acted quickly to implement a key recommendation in our recently released report ‘A tax system that works for small business’ which will allow small businesses to pause ATO debt recovery actions until their case is resolved by the AAT,” he said.
“Currently, small businesses are only able to pause or modify ATO debt recovery actions through the court system. Under the proposed changes, small businesses can save thousands of dollars in legal fees, not to mention up to two months waiting for a ruling.
“In line with our recommendation, the AAT will be able to pause or modify ATO debt recovery actions, such as garnishee notices, interest charges and other penalties until the dispute is resolved. It means that rather than spending time and money fighting in court, small business owners can get on with what they do best – running and growing their business,” Mr Billson said.
The small business company tax rate will reduce from 27.5 per cent to 26 per cent in 2020/2021 income year and 25 per cent in the 2021/22 income year. The loss carry back provision will also be extended to June 2023. The tax initiative allows a small business to carry back tax losses from 2022/23 income year to offset previously taxed profits as far back as 2018/19, to support business recovery, according to the Federal Government.
As part of the $506 million package to support SMEs, the JobTrainer program will now be extended for another 12 months, so that SMEs can employ apprentices and trainees with a 50 per cent wage subsidy of up to $28,000 per year. The incentive is aimed at SMEs taking on new apprentices and trainees.
JobTrainer will also offer low-fee or free courses to thousands of young Australians, primarily in fields where small businesses are struggling to find staff. The Government will also help Australian businesses attract and retain staff by removing cessation of employment as a taxing point for the tax-deferred Employee Share Scheme (ESS) and reducing red tape for ESS.
Instant asset write off
Small businesses will also continue to write-off the full value of assets purchased until 2023 after the uncapped instant asset write-off was extended for one-year for small business. This will allow small business more time to plan and buy major equipment, reducing depreciation and cutting red tape.
Over the next four years, the Federal Government will also spend $134 million on its deregulation agenda, including investing in regulatory technology (regtech) to support smaller employers comply with modern awards, provide data on pay and conditions and assist payroll software accuracy.
Research shows a small business hiring its first worker can spend up to 18 hours getting their head around awards, pay rates, tax, OH&S and record-keeping obligations and often small business owners are time poor and do not have the resources to deal with compliance, according to Mr Billson.
“This government investment in ‘regtech’ is a positive step towards making it easier for small businesses to pay wages and entitlements correctly and on time, recognising how much they value their team,” Mr Billson said.
Up to $11 million will be invested in the implementation of automatic mutual recognition of occupation licences across states and territories.
“This will help small business tradespeople who want to meet the demand for their skills in different areas of the country,” he said.
An additional $16 million is also being committed to ensure effective implementation of the Payment Times Reporting Scheme, which has been in effect since January 1, 2021.
“This reporting framework requires big business to be upfront and honest about the time it takes to pay their small business suppliers. Cash flow is king for small business and we know that if small businesses are paid on time, the whole economy benefits. AlphaBeta estimates if large businesses pay small businesses in 30 days, the net benefit to the economy is $313 million per year,” Mr Billson said.
As part of the budget a Franchise Disclosure Registry will also be established at a cost of $4.3 million, with the registry requiring franchisors to lodge disclosure documentation about their franchise on a yearly basis.
This is about improving transparency of franchise operations and providing prospective franchisees with vital information they need before entering into an agreement, Mr Billson said.
“My office has advocated for the implementation of this registry as a key component of effective due diligence all prospective franchisees should undertake before entering into a franchise agreement,” he said.
Over the next four years, the Australian Government will also provide $2.6 million to support SME participation in procurement, including mapping common pain points for SMEs.
A reinsurance pool will be backed by a $10 billion Australian Government guarantee to cover cyclone and flood damage across Northern Australia from July 1, 2022, with the scheme broadly in-line with a recommendation in ASBFEO’s Insurance Inquiry.
“Our Insurance Inquiry revealed that too many small businesses have been crippled by rising insurance costs and some cannot get it at all. A reinsurance pool will go some way to addressing this key barrier for small businesses in Northern Australia. However, barriers still exist for SME insurance coverage in other parts of Australia,” Mr Billson said.
“In the course of our Insurance Inquiry, we spoke to over 800 small businesses – about 12 per cent of those were from Northern Australia. That means there are still many small businesses out there experiencing difficulties with accessing necessary and affordable insurance coverage.”
“My office is ready and willing to work collaboratively with the government, relevant agencies and the insurance industry towards making essential insurance products affordable and accessible for small businesses across the country,” he said.
The Federal Government has also allocated $129.8 million on consolidating and expanding small business and entrepreneurial services to support people who want to start, run and grow their own business.
“The number of New Enterprise Incentive Scheme (NEIS) places will lift from 8,600 to 12,000 per year for people looking to create their own start-up livelihoods. It will also support existing micro-businesses to adjust to changing labour market conditions to ensure these businesses remain viable and resilient to changes in the face of turbulent trading conditions,” Mr Billson said.