Budget’s $27bn Tax Plan Will Help Small Business Move Online

New measures in the federal budget could give a boost to businesses looking to weather the pandemic by moving online, as a majority of small to medium enterprises reported losses of up to 75 per cent this year.

According to a survey by not-for-profit membership organisation Business Australia, only nine per cent of businesses with 200 staff or fewer saw sales grow during the pandemic, with a further 18 per cent experiencing steady sales.

In his speech on the 2020-21 Budget, Treasurer Josh Frydenberg announced a $27 billion tax plan that will allow up to 99 per cent of businesses to write off the full value of new assets, saying it would “boost the order books of the nation” and benefit every sector of the economy.

“This will be available for small, medium and larger businesses with a turnover of up to $5 billion until June 2022. It is a game changer. It will unlock investment. It will dramatically expand the productive capacity of the nation and create tens of thousands of jobs,” he said.

Richard Spencer. (Picture: Gregg Porteous)

Richard Spencer, Chief Customer Experience Officer at Business Australia, told ChannelNews that businesses that shifted their operations towards an online or hybrid model have seen success during COVID-19.

“I think that the recovery is going to be much more digitally led than probably we would have seen the economy operating in six, seven months ago.

“I’ve spoken to a few organisations that have been able to grow during this particular crisis, because they were already really well set up to trade in an online capacity,” he said.

Though he has no specific data, he believes the consumer electronics sector has also been well-placed to thrive in the pandemic.

“As more people have spent more time in their homes, they’ve thought about, what do I need to make this a better working environment and/or a better living environment? And a lot of that stuff gets sold quite well online, so I’d imagine it’s probably done OK,” he said.

According to Spencer, the instant asset write-off expansion will enable more businesses to purchase the necessary equipment to move their operations online.

“At a really basic level, if you have to invest in new technology, you can write that off. That’s a huge opportunity for organisations to think about how they now position themselves to trade in that hybrid operating environment.

“The other thing is investing in technology to allow for greater levels of remote working and home-based working to take on opportunities that might involve more online sales,” he said.

As well as the write-off expansion, Frydenberg announced that, as the pandemic has caused losses in fundamentally sound businesses, companies will be able to offset any loss incurred to June 2022 against prior profits made in or after the 2018-19 financial year.

“In order to keep their workers, these businesses need our help now. They cannot wait years for the tax system to catch up.

“The combination of the immediate expensing and loss carry-back measures will create an additional 50,000 jobs across the country,” he said.

The investment plan will be applicable to 3.5 million businesses employing 11.5 million people, and cover $200 billion worth of investment.