Written on the 14 May 2012


STRUGGLING small businesses will have to survive another year without significant Federal Budget assistance.

Treasurer Wayne Swan’s $1.5 billion surplus was today welcomed with widespread discontent over his scrapping of a proposed 1 per cent company tax cut to save $4.8 billion.

Deloitte believes small businesses will be worse off and benefits of a maximum $300,000 loss carry-back will not provide struggling entrepreneurs with the immediate relief they had hoped for.

“Small businesses and private companies expecting tax relief this year through the corporate tax cut will have to do without for another year,” says private tax partner David Pring.

“For the loss carry-back to apply companies need to make a profit in 2012 and loss in 2013 and 2014. Those benefits do not flow through immediately and the earliest they will be able to receive the cash is two years from now.”

Businesses had lobbied the Government to expand small business definitions to include more companies. However, Pring says tax reform measures seem to be ‘off the agenda’ without any sign of ‘structural reform’.

Battling retailers will indirectly benefit from tax cuts to customers earning up to $80,000 in addition to an extra $80 a week in family tax benefits for parents with school children aged 16-19 and further $820 for secondary school students and $410 for primary school students.

The immediate corporate write-off threshold has also been lifted 30 per cent to $6500 in addition to the existing $5000 motor vehicle deduction.

“The new write-off threshold is a small lift that helps companies turning over less than $2 million make immediate deductions, removing the need to track depreciation,” says Pring.

“These types of companies are buying laptops and computers, so it is useful from that perspective. The $5000 car and ute deduction also includes depreciation on top of that.”

However, Pring believes companies should not ignore the impact of the new carbon tax, which takes effect on July 1.

“It is really about understanding costs, what can be passed on and incentives to increase energy efficiency,” he says.

The Australian dollar today declined to $1.01 following last night's Budget announcement.

The benchmark S&P/ASX 200 index also declined 0.90 per cent to 4275 points while the All Ordinaries Index dropped 0.95 per cent to 4334 points.






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