With the Abbott government celebrating its first year in office, now is a good time to look at the report card of its achievements in the small business space.
After all, small business owners represent a key constituency for the Liberal Party and as such it might be assumed that this government would be proactive in easing the tax and regulatory burden on this sector, which represents some 96% of all Australian businesses.
Sadly, whilst the government has certainly been aggressively pursuing the interests of big business, it has largely neglected the interests of small business. In fact, I’d go further and note that small business has been one of the most notable losers of the first year of the Abbott government.
The icing on the cake was the recent repeal of the Mineral Resources Rent Tax (MRRT or mining tax). This development has been on the cards all year, indeed it was a key election commitment, but because of the machinations of the rather unstable new Senate, the legislation repealing the tax has only just received royal assent, with the tax set to be axed on October 1, 2014.
Bound up with the mining tax, the previous Labor government introduced a raft of small business relief measures which were intended to be financed out of the proceeds of the new tax. These included the facility for small businesses to carry back tax losses against the profits of previous years – a very sensible relief which brought Australia into line with most of our international competitors – plus an enhanced write-off for the purchase of fixed assets, increasing the instant asset write-off limit from $1000 to $6500. In addition, small businesses were able to write off the first $5000 of any motor vehicle purchases.
Because these small business measures were bound together with the mining tax, when the government announced that tax was to be repealed, the small business measures were also put on the chopping block.
It was last November when all this was first announced and it’s taken until now for the abolition to finally clear the Senate. Along the way, many of the other spending measures linked to the mining tax (like the low income superannuation concession) were – quite rightly – either temporarily or permanently reprieved. Sadly, none of the minor parties in the Senate (who had the power to do something about it) were prepared to stand up and fight for the small business reliefs, presumably because the likes of the PUP saw insufficient headlines and/or votes in it. So, when the legislation finally went through, the small business reliefs were axed.
But wait. There’s a sting in the tail. Not only were they axed but they were axed retrospectively. The small assets write-off and the $5000 motor vehicle write-off were axed as of January 1, 2014, and the loss carry-back relief was axed as of July 1, 2013 (which is before the last election if you recall, so almost uniquely we see a current government acting to reach back into a predecessor Parliament and axe a measure enacted by that Parliament, something which must surely be of dubious constitutionality).
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