The federal budget attempts to be a Robin Hood budget, taking from the rich and giving to the poor, but like the classic tale it might be the Sheriff of Nottingham (aka the Tax Office) that business needs to watch out for.
For small businesses, there aren’t many 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.
The previously announced depreciation provisions that will allow you from July 1, 2012 to write off assets costing less than $6,500 and depreciate motor vehicles at $5,000 per annum have been maintained.
So for some of these small capital purchases it may be worth waiting till July 1.
But if you were looking forward to the previously promised reduction in company tax rates, then you are out of luck.
The Government has dumped this initiative as part of their balancing of the budget and trying to achieve a budget surplus.
Also gone are previously announced deductions for work related expenses.
Key to this budget is the amount of savings the Government is looking to achieve and also the drop in tax receipts that has occurred as a result of the downturn in economic activity.
These two factors are quite critical to the budget outcomes. The Tax Office has been provided with substantial funding to continue with its tax audit activity and collection of tax debts.
Enter the Sheriff of Nottingham.
Expect to see increasing levels of audit activity from the Tax Office as they try to bring home the Government’s expectations on tax collections.
Business owners should be prepared for this and ensure that they have their tax records in good order. Tax audits cost you time and money, even if everything is OK.
Nothing has been done to simplify our tax system, just more to enforce it.
Beyond this, some start-up business owners will access the general tax concessions and family benefits being provided under the budget.
This is not specific to small business, but targeted at all taxpayers on low to medium incomes.
In terms of additional initiatives to stimulate businesses and grow the economy, there does not appear to be much on offer.
For most of us it needs to be business as usual. Don’t look to the Government for additional budget support.
Greg Hayes is a director of Hayes Knight and specialises in taxation and business planning advice.