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The affects on SMEs of the 2016 Federal Budget
04 May 2016
This year’s Federal Budget
No doubt, there’ll be a sharp intake of breath by smokers around the country today in light of the Federal Treasurer Scott Morrison’s first budget. Taking into account the increase in government excise over the next four years, smokers will pay around $40 a packet for cigarettes by 2020. That’s around $15 more a packet.
If you’re an SME (small medium enterprise), however, you’ll be breathing easier - the news is a great deal more positive.
Analysis from Westpac Group Economist Matthew Hassan shows SMEs to be one of the big winners in this year’s Federal Budget.
Westpac, which has more than 640,000 small business customers, sees SMEs as being the backbone of the Australian economy. According to government figures: women make up over a third of Australian business operators, making the SME sector a major employer of women.
Aside from the immediate company tax reduction for smaller businesses, progressively widening to larger businesses and increasing over the next few years, there was also an extension of the instant asset write-off, one of the centrepieces of the Abbott government’s last budget.
The extension means “Tony’s Tradies” has expanded to include businesses with a turnover of up to $10 million.
A range of subtler issues within the budget are also seen by Westpac Group as positively affecting SMEs. A measure for the National Science and Innovation Agenda, which aims to foster greater collaboration between SMEs and the public sector, is one such move. Other measures that look set to support SME include those that make it easier for businesses to hire young people and people in general.
The measures indicate transition to employment programs have SMEs in mind.
The slated review by government of the Competition and Consumer Act to tighten up on misuses of power by dominant players in the market looks set to level the playing field in business a bit more and that should support SME. More generally, there’s the so-called ‘google tax’ on diverted profits by foreign multinationals, which may also play a part in levelling the playing field.
Perhaps, one of the most unexpected things to come out of the first Tuesday in May had nothing to do with the budget and everything to do with the country’s economy and finances: the RBA’s decision to cut interest rates by 25 basis points, marking an historic low of 1.75 percent. For more on this, see Chief Economist, Westpac, Bill Evans commentary.
In a better late than never move, women, many of who take time off work for children and caring, will be helped to build up their super through tax refunds. They will also be able to put more into super in later years when they are back in the workforce and earning higher wages. Partners can also get tax offsets by putting money into a low-income partner’s super.
The government also announced investing an additional $100 million to keep women and children safe under the Third Action Plan of the National Plan to Reduce Violence against Women and their Children 2010-2022. This investment will include targeted assistance for Indigenous and culturally and linguistically diverse women and their children.
It will also invest $9.9 million for the National Domestic Violence Order Information Sharing System.
The System will strengthen identification and enforcement of domestic violence orders (DVOs) across State and Territory borders for police, and courts.
For more on the budget, see Matthew Hassan, Director Westpac Economics.