21st May, 2021
While the headlines tend to focus on big announcements like the extension to Temporary Full Expensing, what do Australian business owners actually care about in the 2021-22 Federal Budget?
Following hot on the heels of a delayed 2020-21 Federal Budget, which saw government spending ratchet upwards, this year’s announcements have followed a similar trend.
From an extension to Temporary Full Expensing, allowing businesses with turnover of $5 billion or less to immediately write-off the cost of assets installed for use prior to 2023, to an increasing focus on the ‘digital economy’, there’s plenty for business owners to discover in this year’s announcements.
So what do MYOB’s small and medium business customers think of the new measures? We reached out to a few in the days following Budget Night to find out.
Interest in the Budget tends to come and go depending on the government of the day and their attitude on how they spend money. But, since the onset of the COVID-19 pandemic, Australia’s business owners have been practically clamouring for any news relating to government support — and that makes the Budget a big ticket item.
“I’m always interested to see what’s in the Federal Budget, I think most people I know in business have some level of interest,” said Marx.
And, as a business leader who had to work particularly hard during 2020 to keep the lights on, Marx is even more aware of how the Budget can impact her fortunes, as well as those of her staff and customers. In particular, she’s always looking for better support for her largest demographic: women.
“As a business that works to support young women from refugee backgrounds find meaningful work and achieve financial independence, I was happy to see the pressure on the government in the lead-up to do more to support women’s economic participation.
“The Budget falls well short of addressing the root causes of gender inequality, but I was happy to see greater investment in childcare and industries dominated by women.
“I would have really loved to see more grants made available for female founders of startup businesses to scale.”
Another key point of discussion in the week or so leading up to the announcement was the digitisation of business and the future of Australia’s digital economy. Aware of this interest, the government announced a boost to the Digital Economy Strategy ahead of time.
“Any support we receive has always been at a State level,” Marx told The Pulse. “However, having launched an e-commerce business during lockdown, and this being our first time operating in this space, we are interested in some of the services offered through the Digital Solutions program, so it was good to see that this has been extended.”
As part of the government’s Digital Economy Strategy, the Digital Solutions — Australian Small Business Advisory Services program offers tailored advice and links to specialist digital providers to business owners, helping them overcome any technical barriers to entry when it comes to things like sales and marketing online, small business software and online security.
“Digital is such an important piece of the puzzle for Australian businesses,” said Marx. “Prior to COVID-19, we ran an events business, but as we weren’t able to trade for the better part of 2020, we launched an online florist at the end of Melbourne’s lockdown, offering a next-day floral delivery service — The Beautiful Bunch.
“At the moment, we’re mostly focused on social media and marketing, but I see this evolving to improvements with the website that will help us understand our customer more and also enable us to offer a more efficient service.”
Marx now has two businesses to scale instead of one, which represents both technical, logistical and financial challenges, so every little bit of assistance helps.
“Looking at our bookkeeping strategy for the next 12 months, we need to separate the finances of each business, to make everything a little clearer.
“Fortunately I have a good accountant and fantastic bookkeepers.”
The Instant Asset Write-Off has been touted as a popular measure over most of the last decade, slowly increasing in threshold over that time period.
Now, relaunched as Temporary Full Expensing (making it available to the vast majority of the market), the measure is expected to be used in conjunction with revised tax loss carry-back rules to encourage investments and keep supply chains ticking over.
Thomas Bassett, owner of Borderline Plumbing in northern NSW, says these kinds of measures may be of less interest for small businesses due to their application.
“I work closely with my accountant to make sure we’re making use of every deduction and write-off opportunity we can,” said Bassett. “Only issue I have with these particular initiatives is, if you’re not careful, you can easily put yourself into a loss position that won’t look good when it comes time to borrow money in the future — for the business or for personal investments.”
Asset investment is only one element of a trade and construction outfit and, for Bassett, it’s not as high on his list of issues as staffing and supply.
“Since restrictions have eased, we’ve gone bananas and are really struggling to keep up — possibly driven by government support in the property market,” he said.
With the borders closed and the government incentivising spending in the property market, Bassett suspects more people than ever are looking to spend available equity on home improvement.
“Our business has nearly tripled in size within six months, and we’ve had supply and cashflow issues as a result — you can’t always find new workers when you need them, or the materials you need for the job.”
But with a plan in place, Bassett expects to continue building his operations, doubling his staff numbers over the next six months. And, he says, it wouldn’t be possible without a few key government initiatives, such as the Boosting Apprenticeship Commencements wage subsidy, which allows him to put on an apprentice for roughly half the usual cost.
“I’m more than happy to put new apprentices on if they’re keen to work — we have more work than we can manage at the moment, so every bit helps, and it’s getting people into the workforce, which is great.
“Due to the labour subsidy, I’m confident I’m getting my value from a new worker when normally I might not see that value until that apprentice has two or three years under their belt.”
Nigel Weisbaum, sales and marketing manager for Distillery Botanica on the central coast of NSW, also sees a problem with the amount of attention given to asset investment schemes like Temporary Full Expensing — they require a business to have available funds upfront.
“Asset write-offs are a consideration for us, but we can only see so much upside when it requires readily available cash,” said Weisbaum. “Instead, and like many others in the alcohol business, we’re most excited by the Excise Refund Scheme for brewers and distillers.”
Last week the government announced $255 million in tax relief to support small brewers and distillers, and thereby support workers and investment in this category.
From 1 July 2021 eligible brewers and distillers will be able to receive a full remission of any excise they pay, up to an annual cap of $350,000.
Previous to that date, eligible brewers and distillers are entitled to a refund of 60 percent of the excise they pay, up to an annual cap of $100,000.
Weisbaum, who has worked in alcoholic beverages sales and marketing for over 20 years, sees this as a positive move that will bring brewers and distillers a step closer to fair and sustainable tax reform, putting the tax rate closer to the wine producer market.
According to Weisbaum, the spirits industry is at a similar stage to the the wine industry of the 1980s, when the government provided tax breaks and financial incentives for investment. The industry showed promise and is now an important contributor to Australia’s agricultural, tourism and exports industries.
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“The taxation system for alcohol in Australia is very complex, and it results in Australians consumers paying more per standard drink in tax for spirits than beer or wine,” said Weisbaum.
“Spirits drinkers pay more than double the tax paid on a beer, over four times the tax paid on a bottle of wine or cider and nearly 20 times the amount of tax paid on cask wine.
“But with this excise remission proposal will give us, and other businesses like us, a clear opportunity to invest and grow.”
Weisbaum is overseeing an operation that’s only beginning to show its true potential since restrictions eased, and is now growing to include a tourism and experience hub, allowing people to explore the distillery and its surrounding gardens as well as take part in guided tastings — all of which will generate revenue beyond what it brings in from distributing gin wholesale.
“We’re developing an experience center where people can take cocktail classes, as well as setting up 16 mini stills so that our customers can have the opportunity to distil their own gin, and we simply couldn’t do it as quickly as we are without the sort of incentives we’re about to receive from the government.
“We were going to do these things anyway, but excise remissions and other initiatives will allow Distillery Botanica to put on 20-30 percent more staff in the coming months without fear of cashflow issues or other cost-related challenges.”
Want to hear more about what the 2021 Federal Budget means for small business?
See our expert panel featuring the The Hon. Stuart Robert MP, Minister for Employment, Workforce, Skills, Small and Family Business, Dr Craig Latham, Deputy, Small Business and Family Enterprise Ombudsman and Helen Lea, Chief Employee Experience Officer, MYOB, discuss what the Budget means for your small business (from Friday 21 May at 9:30am-10:15 AEST). View it here today.