Budget business measures could harm brokers

Budget business measures could harm brokers | Insurance Business

Budget business measures could harm brokers

It was the Labour government’s last chance to recognise SMEs’ contribution to the Australian economy and reward them with tax breaks and reduced red tape but experts say the 2013 budget completely missed the mark.

Instead of tax breaks and SME incentives, the government focused heavily on big corporates, and failed to commit to implementing tax simplification changes – an SME hope.

“There is nothing in the budget to stimulate small businesses in Australia,” David Porteous, general manager of Brooklyn Underwriting, told Insurance Business. “It is all about big business but 50% to 60% of the economy is made up of SMEs and the majority of brokers and agents are SMEs. There is nothing to encourage small businesses so we can all be a little disappointed in the budget.”

Some key budget reforms include extending the requirement to make monthly Pay-As-You-Go income tax instalments to include all large entities in the PAYG instalment system, including, trusts, sole traders and large investors, BDO stated.

A spokesman said: “This is clearly a pure revenue raising measure with nothing but administrative and cash-flow problems for the affected taxpayers.”

Porteous agrees. “Small businesses that are contracted out by big businesses will be affected by this. A big business could now turn around and say that they will pay the SME every 60 days rather every 30 days because income tax payments are more pressing.”

Government pledged is to employ a string of practices to stamp out aggressive tax practices adopted by multinational companies that ultimately place a greater burden on SMEs.

“Businesses that aggressively exploit tax loopholes gain an unfair advantage over their competitors. If a few large companies use loopholes to avoid paying their fair share of tax, a greater taxation burden is placed on other taxpayers, like small and medium businesses and individual taxpayers,” deputy prime minister and treasurer Wayne Swan said last night.

But Porteous said this did little to help small business. “If you really want stimulate small business in Australia, you would reduce tax for SMEs, you make it easier for them to run their business.”

Deloitte also highlighted SME disappointment with the budget. “Private companies and SMEs read with anticipation of the tax reform road map ‘Cutting tax and red tape for small business’.  Sadly, the measures outlined were depreciation and R&D measures that are already in place.  

“Once again private companies and SMEs will need to wait for tax simplification,” said Deloitte private Tax Partner David Pring said.

“This is a bit of a nothing budget anyway,” Porteous said. “The government will more than likely be replaced in 10 weeks and much of this budget won’t matter.  They can implement the National Disability Insurance Scheme and increase investment on rail and roads because no one is going to say anything about that but we should be listening to what the opposition leader Tony Abbott and shadow treasurer Joe Hockey have to say.”