Pitched as a “battler’s budget” but there was certainly nothing here for business facing challenging and uncertain economic times compounded by the delaying of promised tax reforms. Deferral seemed to centre prominently in the budget as business missed out.
The reneging of the cut in the corporate tax rate from 30 per cent to 29 per cent for small business entities from 1 July, 2012 will significantly effect business in the face of rising costs of business including the imposition of the carbon tax and mineral resource rent tax both considered taxes on production and, indirectly, jobs.
The carry back tax loss provisions enabling losses to be offset against tax paid in the prior year from 2012-13 increasing to two years from 2013-14 up to a maximum of $300,000 per year while providing some relief to companies is really limited in its application to incorporated entities. This restriction is unfair for many of the unincorporated business entities.
The proposed changes to the Living Away From Home Allowance (LAFHA) will provide a tax concession for a limited period of 12 months in respect of an individual employee for any particular work location and will impose a significant cost burden on both business owners and their employees.
On the positive side the previously announced Small Business Entity asset write-off provisions were confirmed with an increase from $5,000 to $6,500 for eligible assets but remaining at $5,000 for cars and utes. Notwithstanding, this is only a timing issue as businesses are only able to claim 100 per cent write-off.
The concessional contribution cap of $50,000 for individuals aged 50 and over with superannuation balances in excess of $500,000 will continue for a further two years until 30 June, 2014. This encourages the principal of superannuation to assist people to fund their own retirement.
With the backdrop of instability in Europe, a struggling US economy void of Government leadership, business confidence is at an extreme low. One might question the motivation and timing on the insistence that the budget must be in surplus in 2012-13.
Andrew Graham is the National Head of Business Solutions for RSM Bird Cameron. RSM Bird Cameron turned 90 on 27thMarch 2012. Over the past 90 years, they are proud to have developed a unique one-firm national structure, with 26 offices and 950 staff. More importantly, their heritage means they truly understand Australian business trends and conditions. They are intrinsically connected to Australia.