What Scott Morrison’s Budget would mean for online retailers
The Federal Budget put forward by the Morrison Government on Tuesday is heavy on tax cuts for everyday Australians and support for small businesses. But there are several other measures that could have an impact on e-commerce businesses, should the Coalition Government be reelected. Here’s an overview of the most important parts of the Budget for online retailers.
Consumer tax cuts could boost spending
Treasurer Josh Frydenberg laid out a plan to deliver $158 billion in tax cuts for everyday Australians, which could see more than 10 million Australians will get tax relief as early as July.
Under the plan, the 32.5 per cent tax rate would be cut to 30 per cent, meaning 94 per cent of the tax-paying public – those who earn between $40,000 and $200,000 – would pay less tax. For the 4.5 million Australians earning between $50,000 and $152,000 per year, the savings would amount to $1080.
Frydenberg described this as the biggest change to the country’s tax system since the Howard Government, and said it would help to counter the rise in cost of living and boost spending in the economy.
Russell Zimmerman, executive director of the Australian Retailers Association, agrees.
“Given taxpayers will have this cash as soon as July if their tax returns are complete, this represents a substantial and almost immediate boost to retail spending across the economy,” Zimmerman said.
Funds to help small businesses grow
Small businesses stand to benefit from several provisions in the Budget, such as the instant asset write-off program.
The Morrison Government has proposed lifting the cap on annual turnover for businesses to qualify for the instant asset write-off from $10 million to $50 million. According to Frydenberg, this would translate to a further 22,000 businesses becoming eligible.
The threshold for writing off assets would also be increased to $30,000, up from $25,000, and businesses would be able to claim the write-off across multiple assets.
“In a rapidly evolving environment compounded by challenges from online overseas retailers, high energy prices and uncertain economic conditions, this will help Australian retailers modernise and update to ensure they are well equipped to compete and grow,” Zimmerman said.
The Treasurer also announced an additional $60 million for a long-running federal grant program designed to assist in the international expansion of small and medium businesses with a turnover of less than $50 million a year.
The Export Market Development Grant reimburses up to 50 per cent of costs associated with entering an overseas market, such as airfare to the country and digital advertising through Google and Facebook. The Sydney Morning Herald last week reported that Showpo has used $223,114 in EMDG funding over the past four years to run ads on Google, Facebook and Instagram, and 2XU has also benefited from the program.
The Government also announced a new program to improve internet and mobile access in regional areas. The Regional Connectivity Program would upgrade wireless infrastructure in remote Australia, and could allow wider penetration of Australian e-commerce businesses into the farthest reaches of the country.
Along the same lines, the Government confirmed that the National Broadband Network is currently in three in four homes and businesses, and the rollout is set to be complete by 2020.
Support for infrastructure
Other provisions in the 2019-20 Budget that would benefit online retailers include a record $100 billion investment in infrastructure, with highways, roads, and airports all to be improved over the coming decade. Freight routes will see an additional $1 billion added to the already $3.5 billion investment, enabling businesses to more easily access and stock communities around the country.
A four-fold increase to urban congestion funding would tackle the issue of wide-scale congestion in Australia’s largest cities, which limits access to employment and services, while also obstructing access to domestic and international markets. Major corridors and arterial roads would be key priorities, with smaller pinch points to also be addressed.
One thing that wasn’t in the Budget put forward by the Morrison Government on Tuesday, according to critics, was funding to tackle climate change. The Government committed just $189 million over four years to its climate fund, which Greens leader Richard Di Natale called a “cynical mess”.
“It is shameful that this government has only committed a pittance on their national electric vehicle strategy and to modernise our hopelessly outdated electricity network,” Di Natale said.
“One thing that this budget makes absolutely clear is that we don’t lack the financial resources to solve the problems we face as a nation. What we lack is the political vision.”