Industry perspective: what the Federal Budget means for SMEs

For small to medium business owners, the 2014 Federal Budget contained both certainties and uncertainties. Andrew Conway, Chief Executive Officer of The Institute of Public Accountants (IPA) shared his views on what the Budget means for the sector.

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For small to medium business owners, the 2014 Federal Budget contained both certainties and uncertainties. Andrew Conway, Chief Executive Officer of The Institute of Public Accountants (IPA) shared his views on what the Budget means for the sector.

Andrew Conway, Chief Executive Officer of the IPA, said the IPA appreciates the budgetary constraints Australia is facing and the need for bold action by the Government to set the Australian economy on a long-term and sustainable path to economic prosperity and growth. Overall, this Budget attempts to do that. However, the focus is on the expenditure side of the budget ledger, whereas there is a genuine need to have an equal focus on both expenditure and revenue.

The Government has embarked on a significant program of deregulation and reducing red tape, but there is room for Government and industry to foster an environment of innovation and growth.

Small business key areas addressed in the Federal Budget include:

  • Superannuation guarantee: set to increase to 9.5% from 1 July 2014 – one year earlier than previously planned. Even though it was a two-year pause, this provided some breathing space for small business during a difficult financial environment.
  • Corporate tax: The Government is reducing the corporate tax rate by 1.5% from 1 July 2015. However, only one-third of small businesses are incorporated, so the benefit is limited.
  • SME write-off: The current $6,500 SME write-off still stands, but no further announcements were made on the Government’s intention to scale it back to $1,000 from 1 January 2014.If the mining tax and this associated amendment are passed after 1 July 2014 by the incoming Senate, will the 1 January 2014 application date still apply?
  • Budget cuts: Overall budget cuts signal a reshaping of Australia’s social security network through broad structural reforms to the welfare, healthcare, higher education and pension systems. As individuals and consumers, this will impact all small business owners and operators.
  • Regulators cut: Services to taxpayers and small business owners will be impacted by cuts to ATO and ASIC resourcing and funding.
  • Ombudsman for access to Commonwealth services: A new “Small Business and Family Enterprise Ombudsman” will act as a one-stop shop for small business to find out about Government services and programs, advocate on their behalf, reduce compliance and red tape, act as a concierge for dispute resolution, and contribute to the development of small business-friendly Commonwealth laws and regulations. Consultation is already under way on the proposed legislation.
  • New Commonwealth contracting arrangements: The Government will establish a unit within the Department of Finance to provide specialist advice on contracts and ensure small businesses aren’t disadvantaged as part of Commonwealth Government  tendering and procurement processes.

For more Federal Budget insight and analysis, visit our Federal Budget hub.