Now I don’t mean to be a Debbie Downer, and maybe it was because I chose to watch the train wreck that is MAFS (Married at First Sight) instead of the Federal Budget 2019 last night, perhaps I missed some amazing benefits and relief for those micro business owners that make up 75% of my client base.
Here is my personal opinion, my views on how I think the changes will impact my clients. So if you are earning a squillion dollars, you can stop reading now, this is not for you.
This is for the “average” small business owner. The small business owner running a micro business until things “take off”. The small business owner struggling to find the cash flow for weekly expenditure as they are being pulled in every direction. This is for the small business owner who doesn’t have a spare $30k lying around to splash around on new assets. These thoughts are for you.
1. The budget 2019 is not finalised. It is not passed legislation. It doesn’t come into play now. We have to play the waiting game for the election to be announced, run and won to work out which government will be leading our country. Only then can that government choose to pass any/all/none of the so called promises.
2. Have a spare $30k lying around? No, me neither. But if you did, you can go and purchase a shiny new asset and get the entire amount as an immediate deduction. For those of us who don’t have oodles of spare cash around, how do we benefit from this. We don’t (personal opinion). I mean, if we spend $30k of money we don’t have on an asset we don’t need we will get a tax deduction (based on current company tax rates) of $8550. So you need to spend $30k to save around $9k. That math just doesn’t gel with me. Unless of course you have oodles of cash and need fancy new shiny things, well go forth and spend. Happy to give you my spending wish list.
3. Low income earners rejoice. For those earning under $37000, you could be eligible for up to an extra $255 in a low income tax offset. That is around 2.3 million people – so a huge chunk. Now I don’t mean to sound ungrateful, but I mean heck, if you saw my weekly grocery bill that extra in my back pocket would pretty much cover that and leave me enough chump change for a hot chocolate at Macca’s on the way home. Now I am not going to lie, I am grateful for any tax relief, but is it enough? Seriously, the people in the low income brackets are often really struggling and chances are their business will not survive. Personally, I had hoped for a few more incentives for those who are down the bottom of the chain.
4. Tax rates will continue to decrease. Now this, on paper, sounds flipping amazing. However, the time line is way off into the “crystal ball” future that I think by that time comes, we will have about 57 changes in leader and government by then so I don’t think we can fully rely on these promises for the years 2024 and beyond. However, I am holding onto these changes and hope they do come into play.
5. The Black economy might not be so black any more. Now this gets a bloody huge thumbs up from me. I feel part of the reason our taxes are considered “high”, is that there are many underground businesses operating in Australia doing the wrong thing. Earning income and not reporting it, running a business without an ABN, sham contracting & the cash economy so to speak. Now whilst we all feel we are getting a discount for paying cash, this means that money is not reported in our tax system and the government misses out on the tax income. That same income which funds health, transport, education etc. Those vital services we ALL rely on at some stage. So to those business owners doing the wrong thing, look out. Resources are being invested to find you.
6. If you are in the ant eradication business, you will be booming. Now excuse my lack of knowledge on the ant problems faced in Australia, but allowing around $27.5 million for 3 separate ant projects seems a little cray cray to me. Yes, you read that right. $27.5 million. On further investigation (seriously I need to get a life) ants are posing issues to crops in Australia. So I am totally on board helping out our Aussie farmers….but $27.5 million. On ants. I have not come to grips with that number yet.
So for my clients, for my clients who are earning $50k or less what do you get. A small tax break – between $255 and $1080 depending on your taxable income levels.
I don’t feel my clients will be utilising the full $30k instant asset write off. I mean, Trent Innes from Xero came out last night and said the average spend is around $2760. So increasing the claim to $30k has zero to nil effect for many many small business owners.
“My personal view, it ain’t a benefit if we are not actually benefiting. Sounds great, but perhaps gives people false hope around the true result.”
So I guess, my Debbie Downer truly came out last night. The federal budget did not excite me (but seriously who watched MAFS – Mike said I love you for the first time ever!).
What had I hoped for? Good question. I was hoping for more relief for those starting up a business. Those who want to do the right thing, but find startup life extremely restrictive in many ways. Something to give those people a boost, a reason to continue. Those people who, after 2 years in business are still struggling as let’s face it, not everyone has a multi million dollar business. But those micro business owners make up such a huge part of our eco system I think they need a bit more nurture and support.