The Coalition victory took many by surprise, but as the dust settles it’s time for the government to roll up its sleeves and start delivering on a host of pledges.
Small business was a key battleground during this year’s election campaign. Labor spooked some with policies that included plans to allow casual workers to apply for permanency, and a pledge to reverse cuts to Sunday penalty rates.
Meanwhile, the Coalition promised tax cuts to stimulate weak consumer spending, along with big budget plans to boost infrastructure and skills training. It also promised to cut electricity prices and focus on helping SMEs access finance. So, when can we expect these changes to roll through?

On the books

Some promises, such as an expansion of the Instant Asset Write-Off Scheme announced in the April Budget, have already been legislated. Under the current scheme, passed on April 4, eligible businesses can immediately write-off any depreciable assets that cost less than $30,000, helping small firms offset the cost of investing in new equipment and vehicles.
Along with boosting the threshold and extending the scheme to include anything purchased before June 30, 2020, the eligibility criteria has also been expanded to include any business with an annual turnover under $50 million. This is up from the previous turnover cap of $10 million.

Cut tax to boost spending

The government has focused on tax cuts to put more money back in people’s pockets. This is in the hope that it may loosen tight household purse strings and get money flowing to small business.
Before the election, the government promised to more than double the tax rebate granted to low and middle income workers, with those earning $48,000 – $90,000 to receive $1080 (up from $530) back from the government after lodging their 2018/19 tax return. The offset scales back incrementally to cut out at an annual income of $126,000.
However, it now looks likely this flow of cash will be delayed because parliament may not be recalled in time to legislate changes before the end of the current financial year. According to media reports, this means taxpayers could receive their offset in two separate payments. The recent Reserve Bank rate cut, however could help boost discretionary spending in the short term.

Business tax cuts

A previous government pledge remains in place to bring planned small business tax cuts forward by five years. Under current plans, the tax rate for businesses with turnover of less than $50 million will drop from 27.5% to 25% by 2021/22.

Power cuts

Rising power prices have been a major concern for small business owners around the country. In the final week of the election campaign, Energy Minister Angus Taylor – who retains his portfolio, promised the Coalition would cut wholesale electricity prices by 25% by 2021. The target is based on findings and recommendations from an Australian Competition and Consumer Commission report on pricing last year. The Coalition also plans to boost supply by providing financial support for new electricity generation through the Underwriting New Generation Investments program.

Talking to The Australian newspaper, Mr Taylor said the government planned to revive “big stick” legislation, shelved last year, which could see power companies broken up if they engaged in price fixing (1).

Skilling up

From 1 July 2019, incentive payments to businesses who take on apprentices in identified skill shortage occupations will double from $4000 to $8000 per placement. A new payment of $2000 will also be available to apprentices.

The incentives are part of a Coalition pledge to create 80,000 new apprenticeships by 2024. Occupations eligible for the increased payments include: carpenters and joiners, plumbers, hairdressers, air-conditioning and refrigeration mechanics, bricklayers and stonemasons, plasterers, bakers and pastry cooks, vehicle painters, wall and floor tilers, and arborists.

The Coalition has also committed to establish a National Skills Commission in the next year, to give Australian Industry representatives a greater say in the country’s vocational education and training priorities.

Sham plans

Small businesses would be well advised to get on top of any contractor vs employee confusion as soon as possible, with the government planning to establish and fund a special Sham Contracting Unit within the office of the Fair Work Ombudsman from 2019/20.

More than $9 million has been allocated to fund the unit for four years to crack down on employers using sham contracting arrangements to avoid paying employee entitlements.

Building business

The government has announced plans for $100 billion in infrastructure spending around the country over the next decade.

It includes $9.3 billion for a freight line from Melbourne to Brisbane; $2 billion for a fast rail link between Geelong and Melbourne and $3.6 billion for road and rail links to Sydney’s second international airport, scheduled to open in 2026, at Badgerys Creek.

Small Business and Family Enterprise Ombudsman Kate Carnell has urged the government to ensure projects are broken down to smaller contracts to allow SMEs to directly tender for maximum benefit.

Funding access

The government passed legislation in April to establish the Australian Business Securitisation Fund Act 2019. Under the scheme, the government will inject $2 billion into the securitisation market to deliver significant extra funding to help smaller banks and non-bank lenders provide more competitive loans to Australian small businesses.

In addition to the Securitisation Fund, Prime Minister Scott Morrison also campaigned hard on a Coalition plan to set up an Australian business grown fund. It would be modelled on successful ventures in the UK and Canada, in which government has partnered with the private sector to provide “patient capital” to establish or help grow small and family businesses. In April Mr Morrison announced the government would stump up $100 million to get the fund off the ground but, so far, NAB is the only one of the Big Four to agree to match the contribution.

Please note, we do not provide tax, legal or accounting advice. This article has been written for general informational purposes only and is not intended to provide, and should not be relied on, for tax, legal or accounting advice. We encourage you to consult your own tax, legal and accounting advisors before engaging in any transaction.

1 Benson, S, Coalition’s big stick for energy firms at the ready, The Australian, 29 May, 2019.