Budget delivers unexpected boost to small business
The second budget delivered by Federal Treasurer Scott Morrison delivers an unexpected boost to small business, including online retailers, industry leaders say.
“This year’s budget is a win for small business, the lifeblood of the economy. There is a bright future ahead for these companies, especially in the e-commerce space, which is growing 10 per cent year-on-year,” James Chin Moody, CEO and founder of Sendle, said.
“It is encouraging to see the support in this budget that is being offered to the tens of thousands of these small online retailers across Australia.”
Speaking to Internet Retailing, Paul Greenberg, CEO of the National Online Retailers Association (NORA), said the instant asset write-off scheme, which lets businesses write off up to $20,000 in assets purchased for the business, is a “big win” for small businesses.
The tax write-off has been extended beyond 1 July 2017.
In addition, many more businesses will now be able to take advantage of it, since the government widened the definition of ‘small business’ from companies turning over less than $2 million to companies turning over less than $10 million.
“All of a sudden, many more of us [online retailers] are getting into the small business category, and that’s another nice win,” Greenberg said.
According to one estimate, the change will impact 90,000 businesses, which will also benefit from paying reduced company taxes as of 1 July 2017.
Greenberg said the budget could have done more to fund digital innovation.
“I didn’t really see support for innovation or grants for R&D, which are digital enablers of e-commerce,” he said.
In addition, some initiatives in the budget could have a negative impact on small businesses, including new fines for companies employing skilled workers from overseas.
Businesses with a turnover of less than $10 million per year will be required to pay $1,200 up front per visa per year for each employee on a Temporary Skill Shortage visa, while also making a one- off payment of $3,000 for each employee being sponsored under the permanent Employer Nomination Scheme.
Those turning over $10 million or more will be required to pay $1,800 per visa each year and make similar one-off payments valued at $5000.
This is expected to put $1.2 billion into government coffers over the forward estimates.
Russell Zimmerman, executive director of the Australian Retailers Association, said he has serious concerns about the visa changes, particularly for their potential impact on the ability of retailers to recruit overseas talent in specialised roles currently under-represented in Australia.
“There are a number of occupations involving consumer skills and marketing that will be affected, so it is a concern and we’ll be taking that issue up with the government,” he told Inside Retail.
The budget contained several other measures that stand to affect retailers, including:
- Tougher penalties for breaching Australian Consumer Law, increasing maximum penalties to three times the benefit received from the relevant act, or 10 per cent of annual turnover.
- The government will recover $112.6 million from companies regulated by ASIC for costs associated with the promotion of financial literacy and the administration of unclaimed money, among other things.
- A tax avoidance crack down that negates foreign trusts and partnerships in corporate structures, which “circumvent multi-national tax avoidance law”.
Inside Retail journalist Matthew Elmas contributed reporting.