While most small business owners are optimistic for future trading conditions, many of them believe next week’s federal budget should include a reduction to the company tax rate, further cuts to red tape, and the permanent introduction of the instant asset write-off.
Data released by MYOB on Tuesday shows that almost 60 per cent of small businesses surveyed are optimistic for improved economic conditions over the next 12 months, with 84 per cent of them reporting a return to pre-pandemic trading conditions.
“We also know that JobKeeper was an effective interim measure, with 78 per cent of businesses that accessed the scheme saying it allowed them to continue through the pandemic,” said Helen Lea, chief employee experience officer at MYOB.
However, small business owners are calling for the inclusion of added relief in next week’s federal budget.
According to MYOB’s research, 34 per cent of small business leaders want to see the company tax rate lowered, 27 per cent want to see further cuts to red tape, and 19 per cent want to see the instant asset write-off introduced on a permanent basis.
A further 18 per cent would like to see the government introduce policies that encourage small business superannuation contributions, while 15 per cent called for digitisation incentives, and another 15 per cent hope to see easier access to government procurement included.
“Next week’s budget is another chance for the government to show their strong commitment to small business and to give small business owners the confidence to invest and to create more jobs as Australia continues its economic recovery,” Ms Lea said.
The 2021–22 federal budget is broadly expected to centre around driving down unemployment and incentivising growth. In a federal budget preview released on Tuesday, Westpac chief economist Bill Evans said the government’s strategy is to go for growth, generating more jobs and getting more people back into work.
Westpac also expects the low and middle income tax offset (LMITO) to be extended for another year.
“That policy was originally introduced to compensate tax payers earning up to $125,000 before the the introduction of the Stage 2 tax cuts. The Stage 2 tax cuts were introduced in 2020–21 and the LMITO was intended to expire,” Mr Evans said.
“However, at the height of the COVID pandemic, the government considered further stimulus was necessary and extended [the] LMITO for another year — effectively giving those taxpayers a double tax cut.”
The bank suggests that in extending the LMITO for a third year, the government will miss an opportunity to bring forward tax reform, and take them to four years without the introduction of any substantial tax reforms.
“If the government had decided to bring forward the Stage 3 cuts to July 2022 and not extend the LMITO, the net cost would have been around $10 billion — $17 billion for Stage 3 against $7 billion for LMITO,” Mr Evans said.
“LMITO was designed as an interim measure, and its extension is not tax reform and continues double compensation.”
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