There is a big gap between what politicians say and what is happening ‘on the ground.’ It’s like they’re playing with the map and we’re driving on the roads. We are the ones who experience the road blocks and the pot-holes, the redirection, and changing traffic conditions. While a new road might be announced to resolve some of the issues, you still have to wait for it to be built. So, it is with the Federal Budget.
Here’s what some of the road ahead looks like for business:
For small business there is not a lot of additional measures that will assist them, certainly in the short term.
The new company loss carry back provisions are good news for businesses operating through a company structure. Where a company has paid tax in the prior two years and then makes a loss from the 2013 year it will be able to carry back the loss and get a refund of the company tax previously paid. This has a maximum refund of $300,000. Good for companies, but other businesses will not benefit, and the earliest that you will be able to access this tax relief is in the second half of 2013.
This is where business comes in. For business, the 2013 Federal Budget was an itemisation of what you’re not getting; $4.8bn in company tax savings apparently. But the changes in company tax rates – due to commence on 1 July for small business, never saw the light of day. So, it’s hard to feel the effects of something you never experienced.
The upside is not what was announced but what wasn’t. Many of the previously announced small business initiatives and the more generous of the existing concessions – such as the small business CGT concessions – have been preserved.
So, the Budget offers nothing that will change the shape of business in Australia.
What will be felt on the ground however is the drive to collect every tax dollar owing. In the Budget speech, Treasurer Wayne Swan pointed out that tax receipts are down $150bn since the GFC. What this is likely to mean, emphasized by the $378m in direct ATO compliance activity funding, is a more aggressive compliance focus.
Anticipated to take effect from 1 July:
There is no one answer to this question that is right for everyone.
You can however identify the factors that you should consider. In the main these are:
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