This financial year started in a recession and SMEs faced an uncertain future. As this tumultuous period settles in Australia, many small businesses are booming again, while others are still struggling to adapt.
With more work to be done to recover from the pandemic, Australian SMEs are closely monitoring this Tuesday’s federal budget.
The unprecedented nature of the last year has had a significant impact on small businesses and many will be seeking financial reprieve, tax incentives and business support from the federal government.
What’s on the SME federal budget wish list this year?
1. Replacement for JobKeeper
The small business JobKeeper lifeline was widely utilised and well-received. It allowed small businesses to keep staff on the books and their businesses open amid hostile conditions.
With this incentive no longer on the table, after wrapping up on March 28, JobMaker has been poised to take over this role.
JobMaker (a credit which incentivises the hiring of staff aged from 16 to 35) is slated to operate between October 7, 2020 and October 6, 2021, with many SMEs looking for an extension or expansion.
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If not in the same form, SMEs will still be seeking any further or continued incentives which will allow them to hire staff, not only keeping themselves afloat but also getting young Australians still impacted by the recession back to work.
2. Digital technology uptake support
In the wake of COVID-19, the reliance on digital solutions such as e-commerce and cloud accounting applications saw a significant uptick. With remote work thriving, the need for fast and reliable internet, especially in rural areas, also came to the fore.
SMEs who switched business models to include a broader dependence on digital solutions (including online delivery models) will be looking for further support, incentives, and tax breaks to allow them to continue operating in the digital space.
Many have expressed the desire for significant internet support, investment, and subsidisation. An increasing cohort have begun viewing cheap and reliable internet access as a fundamental right.
In the wake of the pandemic, the federal government rolled out financial incentives for the uptake of digital e-commerce solutions (including training) which were well received. Similar programs of this ilk will be a popular budget addition.
As Sam Allert, CEO of accounting software provider Reckon notes:
“SMEs are underpinning their operations with digital solutions at an exponential rate. It might be time to recognise the fundamental necessity of cloud software and internet access in running a successful small business in Australia.”
3. Business cash injection, tax, and loan support
With various programs, such as JobKeeper and the SME Recovery Loan Scheme coming to an end, many SMEs are seeking programs and incentives that allow them to stay in business.
With positive cashflow a continuing pain point, extensions of loan schemes to funnel cash into businesses and a reduction of sales taxes have been touted as measures SMEs want to see in this year’s federal budget.
More indirect cash injection schemes are also being sought by SMEs, similar to the NSW state government’s Dine and Discover vouchers.
4. Focus on women
Significantly, more women lost their jobs during the early stages of the pandemic than men.
According to the ABS, in May 2020 there were almost 98,000 less university-educated women in work compared to the start of the pandemic.
This is opposed to 37,000 fewer young men.
After reviewing the ABS data, Angela Jackson, lead economist for Equity Economics noted that, “we are actually seeing women with bachelor’s degrees and above doing far worse in the labour market than young men. It could be what we are seeing is discrimination.”
This disparity also resulted in much higher incidences of women gaining early access to their superannuation accounts compared to men, potentially leading to further disproportionate financial strain later in life.
Many Australians, both individuals and SMEs, will be looking for measures that aim to reduce gender inequality and assist women in achieving parity.
5. Super changes
Many Australians are looking forward to hearing announcements around superannuation, to ensure future prosperity.
There is an expectation around the announcement of the super change not being delayed and that the super guarantee will shift to 10% — as planned.
There were also super changes announced in last year’s budget (Your Super, Your Future) that are expected to be legislated and should come into play this year.
At Reckon we are more than just accounting software, we aim to help small businesses build the foundation to grow and succeed – easy and affordable compliance is an essential part of this.