Federal Budget 2018 – high notes for SMEs, but further investment required for our innovation future

Federal Budget 2018 delivers optimistic budget with top priorities confirmed for SMEs. As well as a much-looked for extension of $20k Instant Tax Write-Off.

MYOB commends the 2018 Budget for the delivery of key priorities for Australian businesses including the extension of the popular $20k Instant Tax Write-Off.  However more could be done to support innovation.

MYOB CEO Tim Reed spoke about the Budget as a whole.  “It was great to see positive outcomes for SMEs delivered against a backdrop of balanced financial management.”

It is known that small businesses are forced to manage and balance their budgets therefore the government should too.

“This budget marks another important step towards fiscal repair.” In this case it is pleasing to see the budget deficit reducing more quickly than previously thought.

“In their summation, the measures introduced in the Budget will encourage more people to start a business and for those in businesses to invest and to increase employment.

“The government’s decision to extend the $20K instant asset tax write-off is welcome news for SMEs.” Research prior to the Budget revealed that 7 in 10 small business owners called for this to be extended or made permanent.

“It encourages business growth and is exactly the type of measure that delivers confidence to the business community.

“We’re also thrilled that the government has stood by the Enterprise Tax plan. Australia is a great place to do business and creating a competitive tax plan will encourage business investment. And ultimately drive benefits to Australian employees through the creation of new and higher paying jobs. Our research found that 52 per cent of SMEs sought a lowering the company tax rate. We commend the Government for pursuing this plan,” said Reed.

Positioning Australia for a highly skilled workforce

“Tonight’s announcement of a further $250 million for the Skilling Australians Fund to deliver businesses with the people and skills they need to grow their businesses is a welcome initiative.

“We know that businesses are facing a real shortage in skills and this has played out in MYOB’s recent report Transforming the mid-market. In our survey of medium and large businesses we found the skills shortage is particularly severe for the construction/trade industry, with close to two thirds (61 per cent) identifying it as a significant issue.

“The skills shortage is also hitting large enterprises hard. Almost half (43 per cent) of the sector’s largest businesses (those which employ more than 50 people) said their greatest business pressure was the ability to find qualified staff.

“Any additional support the government can provide businesses will help to secure Australia’s future as an important player in the global economy,” Reed said.

R&D tax incentives a handbrake on innovation

MYOB CEO Tim Reed expressed disappointment around Budget measures that limit the R&D tax incentive.

“If we have one issue with this budget it is that we are concerned that the Government’s decision to cap the R&D tax incentive will cap creativity and innovation, discouraging investment and growth in the critical startup ecosystem, and for small businesses more broadly.”

“While it’s important to ensure investment is channeled correctly, we know that Australian businesses spend less than two per cent of GDP on R&D and this is not enough to drive an innovative and globally competitive future.  It seems odd to limit this measure when there is wide agreement that we need to lift business investment.”

Cash is dying: cash payments above $10k gone

The government’s move to crack down on large cash payments to businesses for goods and services on the black economy.

MYOB CEO Tim Reed said: “We have long argued in support of a shift to a cashless society. This move would eliminate the black economy, meaning tax revenues to the government would increase and all businesses would be placed on a level playing field.”

The government is encouraged to consider the positive impacts a cashless economy would have on business of all sizes. Subsequently effecting the economy more broadly.

SME take outs: moving to a digital future

“What is clear is that the future for SMEs is online.” Reed said. The government’s focus is on digital initiatives.  Including integrated online systems which enable digital reporting. Consequently this means that it’s more important than ever for Australian businesses to be using an online software provider.”

Announced at last year’s Federal Budget, one of the biggest impacts of the new financial year is Single Touch Payroll (STP). STP becomes mandatory for businesses with 20 or more employees on 1 July this year. As well as businesses under 20 employees from 1 July 2019.

“This new legislated reporting change requires employers to report salaries and wages. Together with PAYG withholding and super information.  This is done electronically through the ATO every pay run, not just once a year.

“SMEs need to be across this key change.” MYOB has been working closely with the ATO on this initiative. MYOB’s payroll software will be compliant prior to the reporting date.  Therefore it will deliver an easy-to-use solution to make this transition as smooth as possible.

If you think your business might benefit from bookkeeping services. Maybe you need someone to lodge BAS. Perhaps you need a bookkeeping software health check, setting up your books. Then above all don’t hesitate to get in touch. We’ll tailor a package that sets you up correctly from day one.

Contact Timewise Financial Solutions on 0419 181 082 or by clicking here today