2012 Federal Budget: some wins for business, however focus favours households
09 May 2012
Small businesses have been confirmed as one of the winner’s from this year’s Federal Budget, however according to CommSec Economist Savanth Sebastian, overall measures announced favour households over business.
Federal Treasurer Wayne Swan has indicated the Budget will return a modest surplus of $1.5 billion for the 2012/2013 financial year, but the budget deficit will reach $44.4 billion for the 2011/12 financial year.
Small businesses will benefit from the introduction of a new initiative that will allow them to carry back losses against previous revenue to receive a refund against previously paid tax. Up to $1 million in losses will be able to be carried back each year, delivering potential benefits of up to $300,000.
To help Australian businesses better understand how the latest Federal Budget will affect them, Commonwealth Bank has today launched a dedicated online resource featuring expert commentary and analysis from the Bank’s team of leading economists.
The site, found at www.commbank.com.au/federalbudget, houses detailed reports and a series of video insights to help explain how the Federal Budget stands to affect businesses across Australia.
New asset write off provisions and accelerated depreciation for vehicles will provide another measure of assistance to small businesses. Businesses will be able to write off $6,500 in new equipment from 1 July 2012 and can also claim $5,000 on cars acquired after 1 July 2012.
The Government has, however, confirmed the pre-budget proposal to reduce the company tax rate by one per cent will no longer go ahead. Keeping the company tax rate unchanged is expected to increase cash receipts by $4.6 billion over the five years to 2015/16, a figure that includes a reduction in receipts from the unwinding of the associated growth dividend.
“Overall, the government has taken the decision to reduce or delay spending to be able to return the budget to surplus,” said Mr Sebastian.
Although this year the government has left the company tax rate unchanged, Mr Sebastian added it was an issue that will need to be revisited in future years, given Australia’s company tax rate is higher than many developed nations.
“The tax rate must remain under consideration for Australia to maintain its competitiveness with other nations,” said Mr Sebastian.
“Although the Government was not able to achieve the required support for the proposed cut to the company tax rate to go ahead, it has achieved a significant turnaround to the Budget's bottom line.”
“Australia is expected to be the first advanced nation to produce a budget surplus following the financial crisis, and we are one of the few economies not to have fallen into recession following the crisis. Should the Australian economy continue to benefit from the industrialisation of China and the associated mining boom, further budget surpluses will also be anticipated in future years.”