Small businesses, which are the heart of the Australian economy and local communities, employing nearly eight million Australians, will be able to save nearly $1.6 billion (US$1.2 billion) on their tax bills for going digital and training workers in the latest federal budget.
The tax break consists of two parts, the first being a $1 billion technology investment boost, which reduces the cost of going digital, supporting businesses to invest more in their digital capability.
The second part includes a $550 million skills and training boost, which encourages small businesses to train new staff and upskill existing staff, helping them to be innovative and grow.
Australian Small Business and Family Enterprise Ombudsman Bruce Billson welcomed the government’s proposal, saying that the budget is another incentive for small businesses to build their digital capacity.
“This is another incentive for small and family businesses to go digital and invest in items such as cyber security systems, cloud-based service, accounting, or e-invoicing software,” Billson said.
“Hardware such as laptops and portable payment devices would also be eligible.”
For every $100 a small business spends on training, they will be getting a $120 tax deduction, to a maximum value of $100,000 per year.
There will also be a structural reform to small business taxation. From 2024, tax payments will be calculated based on financial performance, assuaging financial anxiety in an unpredictable climate like a pandemic.
In addition, more tax requirements will be automated and smaller manufacturers can lodge and pay excise on a quarterly basis rather than monthly.
Council of Small Business Organisations Australia CEO Alexi Boyd said that reducing the number of steps that small business owners need to take is always welcomed.
“In a small business, it’s usually one person, or a few people, responsible for all areas of compliance on top of actually running the business day-to-day. It’s heartening to see the government recognising this and making things simpler,” Boyd said.
Business Council CEO Jennifer Westacott said this year’s federal budget provides well-considered structural reform that will give small businesses the tools and incentives they need to recover from the pandemic.
“These measures recognise that small businesses have borne the brunt of COVID,” she said.
But Boyd said the budget doesn’t address the number one challenge for small businesses right now—workforce shortages.
“We would have liked to have seen more invested into resources for speeding up the process associated with processing visas, simplifying the process of hiring a skilled worker from overseas, and a commitment to extending the removal of tax restrictions or impediments to those who want to engage more in the workforce,” she said.
Westacott echoed the sentiment saying that the shortage of workers is “creating havoc for large and small businesses across the nation’s critical supply chains and contributing to inflationary pressures.”
“Australia will need to win the war for globally mobile talent and ensure Australians can get the right skills quickly with a skills system fit for the 21st century,” Westacott said.
Small businesses are essential contributors to culture, community, and the history of a place, Boyd says.
“Neighbourhoods and towns are often identifiable by the unique mix of shops, cafes, and other small businesses that line their high street. If a small business is lost, part of its community is lost with it,” she said.