Retailers across Australia, especially in the office supply and electronics goods sectors, are preparing for a post-budget sales surge from small business owners following the federal budget.
As part of the federal government’s $5.5 billion small business package, Australian small businesses with turnover below $2 million will be able to immediately deduct every asset they purchase, valued up to $20,000.
Small businesses that supply employees with portable devices like laptop and tablets will also no longer need to pay fringe benefits tax (FBT) on either device.
On top of this, all small companies with annual turnover of under $2 million will receive a 1.5% tax cut and unincorporated businesses get a 5% tax discount.
Fairfax reports shares in Harvey Norman reached their highest levels since 2008 off the back of the news, with shares in rival JB Hi-Fi also reaching a one year high.
According to the report, Harvey Norman chairman Gerry Harvey says he is planning to roll out an ad campaign to take advantage of the budget, while JB Hi-Fi chief executive Richard Murray said he expects the budget to “drive some short-term sales”.
“I wrote the budget and [Treasurer] Joe Hockey read it,” Harvey quipped.
Online tech entrepreneur Ruslan Kogan has already sent an email newsletter to customers advertising the tax deduction but he remains more reserved than Harvey.
“Gerry’s a very colourful character and I could imagine the line of questioning he was responding to. He was probably taking the piss. It’s great to have colourful characters in the retail industry,” Kogan told SmartCompany.
But Kogan says he doesn’t expect the tax deduction will have a massive impact on electronic retail sales.
“In terms of the budget impact on retailers, Kogan is growing so quickly that supply chain optimisation and getting products in the hands of consumers for a slightly better price is more likely to have an impact on our growth than the federal government will have,” he says.
“The reality is that if a business is waiting for a slightly better tax environment before they buy a laptop for an employee who needs one, [they are] running their business in a crazy manner. Tech isn’t an expense. It provides a huge productivity boost that quickly pays for itself.”
Kogan says the tax break “might have an impact on someone upgrading to a $500 laptop instead of a $300 laptop or a 50-inch TV to a 70-inch TV for the board room” but believes “people don’t look at technology as an expense”.
Get SmartCompany FREE to your inbox every weekday.
“Even if you’re unemployed, you won’t hold off on upgrading your mobile phone, because of the value it provides you,” he says.
However, Dr Helmut Imberger, managing director of Pentagon Digital, an Apple reseller located in the eastern suburbs of Melbourne, told SmartCompany he also expects the tax deduction changes to lead to an uptick in sales from small business owners.
“Businesses will be able to work smarter by buying new IT. It means they can provide their customers with better marketing and better tech support if they have the smarts,” Imberger says.
“That’s where we come in. We can show them how they can do better email and better marketing with Apple Macs.”
While Imberger says his business is too large to claim the deduction, the tax deduction will feature in its marketing.
“We’re just doing that marketing now, in fact, that’s my role for today. We’re sending out a marketing newsletter to our list explaining to small business owners how they can benefit from the budget, and we’ll be sending that out today,” he says.