Small Business – Issues to watch out for as budget night approaches

The government has remained tight-lipped ahead of the federal budget for 2022-23, to be held on Tuesday 29 March.

Given that it is an election year, observers suggest any measures proposed will form a key part of the government’s election platform.

So, what can small businesses expect?

Having just come out of large lockdowns in some states and experiencing supply chain challenges, rising costs, staff shortages and the prospect of interest rate hikes in the second half, small businesses are no doubt looking for some help in the budget.

First, many would hope for a further extension of the SME Recover Loan Scheme which is now set to run until 30 June 2022. Building on earlier loan schemes introduced during COVID-19, the government will guarantee 50 per cent of a loan amount for small businesses and repayment can begin up to 24 months after the loan is issued.

Some commentators have, however, lobbied for this to be replaced with the revenue contingent loan (RCL) of the Higher Education Contribution Scheme (HECS).

Another scheme small business groups would like to see extended is the temporary full expensing scheme. Introduced in the last federal budget, it allows businesses with a turnover or income of less than $5 billion to immediately write off the cost of assets they first use or install by June 30, 2023.

With skills shortages a major issue for many businesses, the Business Council of Australia (BCA), in its pre-budget submission, has urged the government to take by investing more in vocational education and training (VET) through an ambitious new National Skills Agreement and by extending the Boosting Apprentice Commencement wage subsidy for a further 12 months at a stepped down rate.

It also suggests catching up on lost skilled migration by raising the annual permanent migration cap to 220,000 places in 2022-23 and 2023-24 and extending visa application charge refunds for working holidaymakers and international students.

“Increasing the size of the skilled labour pool is essential to supporting Australian businesses, jobs and our economy,” says the BCA. “The budget should increase the number of free or highly subsidised training places in areas with the greatest skills needs.”

With fuel prices skyrocketing in the wake of Russia’s attacks on Ukraine, there have also been calls for the government to cut the fuel excise tax. But Prime Minister Scott Morrison has said no announcements would be made on this until the federal budget is handed down.

“I don’t intend to engage in pre-budget speculation on this matter or any other matter,” he said.

Also unclear is whether the low and middle-income tax offset (LMITO), which delivered households a tax break of up to $1080 over the past two financial years, will be maintained. If not extended, millions of Australians will pay higher taxes.

But despite the government’s elevated spending during COVID-19, it seems small businesses need not worry about massive budget cuts in March.

Speaking at a conference in March, Morrison noted that it was time to get the budget to more normal settings. “That doesn’t mean you need to go through periods of massive cuts and things of that nature. That’s not, that’s not on our agenda,” he said.

“You normalise this over time. You don’t do it in one fell swoop. You don’t need to go down that austerity path that others sometimes talk about. That is not our government’s fiscal plan. We do not think that would be the best way to manage the budget. We still have very strong priorities in areas like aged care, mental health and, of course, supporting the National Disability Insurance Scheme. But you can’t do that without a strong economy. That’s what pays for it.”

Feel free to contact us for anything that relates to your business finances so we can help with your success.

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