In the upcoming federal election, where do the major parties stand for small business?
- In the upcoming federal election, where do the major parties stand for small business?
- Liberal Party
- Australian Labor Party
- The Nationals
- The Greens
- One Nation
- United Australia Party
With over 2 million small businesses in Australia, the 2019 Federal Election has seen the major political parties trying to outdo each other in their support of small business.
The major political parties have placed SMEs at the forefront of their policies because SMEs are an important segment essential to the future of Australia and its economy. They employ 7 million people (almost half of the workforce), add $40 billion to the economy and approximately $380 billion annually to Australia’s GDP.
With some small businesses deferring business decisions until after the Federal Election, in particular hiring and investment, let’s get a better understanding of each parties policies for small business.
In their words…
So how are they going to do this?
For businesses with a turnover of less than $50 million, the tax rate has been reduced from 30% to 27.5%. They will be reducing this further to 25%.
Instant Asset write-off
An extension of the instant asset write-off until 30 June 2020, for assets purchased up to $30,000 for businesses with a turnover under $50 million. It will only apply to business use assets and small businesses can only access the write-off if they elect to use the small business simplified depreciation.
Improving cash flow
From July, the Government will be required to pay its bills within 20 days, for contracts up to $1million.
Large businesses seeking government contracts will be required to do the same.
Access to finance
A new $2 billion Australian Business Securitisation Fund will be set up to help small business get the funding they need to expand and invest at a better rate.
They will commit to $100 million in funding to establish the Australian Business Growth Fund and partner with financial institutions to provide equity funding to small business. The aim of the Fund is to grow to $1 billion as it matures.
Increasing export opportunities
They have boosted the Export Market Development Grant scheme by $60 million to back small and medium-sized Australian exporters.
Improving workforce skills
The $525 million Delivering Skills for Today and Tomorrow package will strengthen the VET system and provide small businesses with support to take on more apprentices in areas of skills shortages.
This link has more information on the Liberal Party small business proposed policies.
Australian Labor Party
From their Stand up for Small Business, Labor’s Small Business Policy – Labor cares about Australian small businesses and believes small business deserve better if they are to compete, thrive, and employ in the modern economy.
Labor will support the corporate tax rate for small businesses reducing to 25% by 2021-22.
However, they have pledged to introduce a standard minimum 30% tax rate from 1 July 2019 for discretionary/family trust distributions. In the case of a small business running as a family trust, this will make it more difficult to make distributions to those that are not engaged in the business (targeting those that practice income splitting).
A new jobs tax cut for businesses with an annual turnover of less than $10 million that take on new employees who are under 25, over 55 or carers returning to the workforce. These businesses would be able to claim a 30% tax deduction for up to 5 new workers salaries for their first year of employment, capped at $50,000 per company. The new employees would need to have been unemployed for three months or longer.
Instant Asset write-off and Depreciation
Support increasing the instant asset write-off threshold from $25,000 to $30,000 and provide an Australian Investment Guarantee that will allow all businesses to immediately deduct 20% of any new eligible asset worth more than $20,000, with the balance depreciated consistently with the assets effective life. This upfront depreciation cannot be used if the business uses pooling.
Removal of franking credits
Labor proposes to remove the refundable franking credits. This will have a negative impact on small businesses who operate their business via a corporate structure, such as farmers and tradies. Directors who are paid as shareholders will not be refunded any excess income tax paid on their behalf.
Reverse penalty rate cuts
Labor will reverse the penalty rates that were cut by 10-15%, in their first 100 days, and will change the laws to make sure they can’t be cut for anyone again.
They will ensure small businesses are supported to defend themselves against anti-competitive conduct by improving access to justice.
Legislate to establish a new position of Second Commissioner (Appeals) within the Tax Office to ensure small business disputes are given the care and attention they deserve.
Unfair contract terms will become illegal and punishable with multi-million dollar fines.
Deter phoenix behaviour
Implement a Tradie Pay Guarantee, a Tradie Litigation Fund, and a series of reforms to detect, deter and punish fraudulent phoenix operators hurting honest small businesses and employees.
Faster, more reliable internet access
Labor is calling for Fibre to the Curb (FTTC) at a minimum, (instead of Fibre to the Node (FTTN)), in the areas where that remains feasible, to provide businesses with a faster and more reliable connection. Additionally, establish an NBN Service Guarantee that will deliver better protections for small business and consumers.
Labor will establish a new $1 billion Australian Manufacturing Future Fund to drive innovation and help Australian manufacturers grow their businesses and create new jobs.
Under the Competition and Consumer Act, Labor will implement & deliver clear rules for manufacturers and dealerships. The current power imbalance means manufacturers can impose contract terms and set dealership expectations which are to their own advantage, making it difficult for local dealers to properly look after their customers.
More detail about Labor’s small business policy can be read here.
Considering themselves the voice for regional Australia, they see the role of traditional industry sectors as consistently supporting the Australian economy, creating jobs and the source of livelihood for many families.
Manufacturing remains a key part of the Australian economy, employing hundreds of thousands of Australians and contributing tens of billions in annual exports.
Their plan for a stronger manufacturing sector includes:
- Growing exports by Australian manufacturers by delivering more free trade agreements and supporting an Australian Made export campaign to give our manufacturers a bigger edge in overseas markets.
- Supporting manufacturers to modernise and grow through a new Manufacturing Modernisation Fund, support for science, technology and commercialisation, and providing new opportunities in areas like space industry.
- Delivering reliable and affordable energy to lower production costs with their Fair Deal on Energy, as well as gas market reforms and investments in business energy efficiency.
- Ensuring Australia has a world-class skilled workforce that supports smarter manufacturing, including support for up to 80,000 new apprentices.
The Greens are building a fairer world where everyone pays their fair share of tax, so everyone has what they need for a decent life.
The Greens small business policy can be found here
Their economic plan is based on a few simple premises:
- A strong economy is a sustainable economy, built on a healthy environment
- It’s the shape of our economy, not simply its size, that determines our nation’s wealth
- Our economy should work for us, not the other way around
Whilst most of The Greens business reforms are aimed at the big end of town with corporates being their target in terms of reducing subsidies and tax reforms, SME earning more than $10 million per annum will have their tax rate restored to 30%. The tax rate for small businesses earning less than $10 million will remain as is.
Invest in science, research and innovation
The Greens will also invest in the science, research and innovation that will transform our economy and make Australia a global leader in new technology.
Jobs for Australians first and foremost, is the theme for the Federal Election 2019. Their policies that will affect small business include –
- Investigate the abuse of foreign work visas.
- Introduce an apprenticeship scheme that will create jobs for Australians.
- Build infrastructure projects such as a national fast rail service, dams and water projects, hospitals and upgrade major roads.
- Opposing any increase to the G.S.T as it will reduce spending and destroy small business
- Implement a mandatory and maximum payment term, no later than 30 days from end of month, unless agreed at the outset of the contract. Add a fixed sum of compensation, interest and reasonable costs to overdue notices, with interest set at 8% plus the base rate of interest set by the Reserve Bank of Australia.
- Introduce legislation for larger businesses to publicly disclose all payment times and practices and performance against those terms. Larger businesses being the top 100 listed on the ASX and multinationals. Lastly, establish a National Payment Transparency Register that ranks the payment practices of all ABN registered businesses.
- Provide additional Debt Dispute funding for State-run services.
United Australia Party
The United Australia Party represent all Australians. With slogans ‘Make Australia great’ and ‘Put Australia first’, they propose to tackle big issues such as tax reform, increased spending on health and education, mining development and fast trains. When it comes to small business, their policies focus on tax.
Introduce zonal taxation for regional areas for people and businesses living 200 kilometres from a state capital will pay 20% less tax to incentivise investment, resettlement and growth.
Timing of paid company tax
Proposing to overhaul the timing of when companies pay their tax. Instead of paying quarterly, firms would only have to pay once at the end of the financial year.
In case you missed it, we take a look at the 2019 budget announcements that matter to you and your business.
Perhaps the Federal Election has highlighted the need for your business to conduct a health check, to assess your profitability and viability and empower your decision making – check out our article ‘Does your business need a health check?’
If you are concerned how any of these new proposals or policies may affect your business, call us on 1300 319 870, we’re happy to help work out their impact or the opportunities they can provide to your business.