Growthonomics: 2009 Budget Special

With both federal and state 2009 budgets announced and dissected in the media, let’s examine the implications for small-to-medium business in WA.

Both budgets recognized the sector as deserving specific focus for positive measures.  Wayne Swan went as far as to describe small businesses as “the backbone of the Australian economy”.  In response, the coalition announced its small business action plan, describing the sector as “the most critical part of the economy – the source of much of Australia's innovation, economic growth and job creation.” It’s good to see the major parties agreeing on something!
 
 

Richard Thorning
Director
Centre for Entrepreneurship

1. Federal Initiatives Summary, related to SMEs:

Businesses will be able to claim a 50 percent tax deduction for qualifying assets, on top of the normal tax deduction, for eligible new assets bought between December 2008 and December 2009.  This provision applies to companies with an annual turnover of $2 million or less.  For a small business on a tax rate of 30 percent, this will mean a 15 percent reduction in the price of the asset.

Small businesses will also receive capital gains tax relief. The government has announced it is making changes to the small business CGT concession provisions; further details are expected in coming months.

Under the Small Business Online program the government will provide $10 million over two years to help small businesses take advantage of e-business opportunities and expand their online presence. Funds will be directed to businesses that consult to small organisations on e business issues. 

The Department of Innovation, Industry and Research is providing a new service for two years to help small businesses affected by the global financial crisis. Small business owners can access support on issues to do with finance, cash flow management, retail leasing, promotion/marketing and personal counselling.

For businesses up to $20 million turnover the current value of the R&D tax concession is approximately doubled. 

The Department of Workplace Relations will receive $14.3 million over two years to support the introduction of the new workplace relations system. Much of this funding will be directed to run education services to help small businesses understand the new workplace relations laws, especially provisions about collective bargaining and the Small Business Fair Dismissal Code.

The deemed dividend rules contained in Division 7A of the Tax Act will be extended to payments by way of a licence or right to use real property and chattels. This will reduce the scope for private companies to allow their shareholders or associates to use company assets such as real estate, cars and boats for free or at less than the arm's length value.  The Government is also tightening the non-commercial loss rules to prevent high income individuals from offsetting excess deductions from non-commercial business activities against salary and other income.

2. WA State Initiatives Summary, related to SMEs

Business owners with payrolls up to $3.2 million will be eligible to receive one-off payroll tax rebate and employers with payrolls up to $1.6 million will be paid a one-off rebate to fully offset their 2009-10 payroll tax liabilities, up to a maximum of $46,750.

The government has also committed to reforming land tax, with a 50 per cent cap on growth in land values for the purposes of assessing land tax and the metropolitan region improvement tax (MRIT). It will also re-introduce concessions for property developers, allowing developers to pay land tax and MRIT on the undeveloped value of land holdings for one year after the creation of lots.

Employers of apprentices and trainees, the unemployed and the tourism industry will benefit from a $155 million jobs protection package.  This will deliver a rebate on workers' compensation premiums for first year apprentices and trainees over the next two years, and exemptions on course fees to eligible unemployed Western Australians.

The Small Business Development Corporation will receive $2 million for the BIZFit business resilience program, designed to provide hands-on training, support and guidance to small business operators.

The government will provide an additional $5.7 million for tourism marketing to protect the 80,000 jobs.

You should, of course, refer to the legislation that results from these budget speeches and take advice from a professional adviser.