Small Business Minister Bruce Billson yesterday announced the preliminary details of the Jobs and Small Business package to be delivered in next week’s Budget.
In a joint statement with Treasurer Joe Hockey, Billson said that the package aims to “make it easier for small business to do business” by removing red tape and introducing “common sense” reforms.
“The hard working women and men of Australian small business are the engine room of our economy. Their innovative and entrepreneurial spirit will drive Australia’s economic future,” the statement read.
As part of the reforms, startups and SMBs will now be able to immediately write off the professional costs of doing business, such as accounting and legal advice, rather than writing them off over five years.
Entrepreneurs will also be able to register new businesses through one streamlined site, while business owners will also be able to change the legal structure of their businesses without incurring a capital gains tax liability. However, though it will be easing the tax burden here, the Government has also announced that it will be introducing the GST to the imports of ‘intangibles’ – largely online goods and services such as downloaded books, movies, and software.
Perhaps of greatest importance to startups is the news that the Government will also be “removing obstacles” to crowdsourced equity funding (CSEF).
In an article for Startup Daily last year, Chris Gilbert of Equitise explained that Australian startups couldn’t access CSEF due to regulatory barriers faced by intermediaries, including limitations around the involvement of ‘unsophisticated’ investors, classifications of public companies, and the marketing of private placement deals.
A report submitted to the Federal Government by the Corporations and Market Advisory Committee (CMAC) last April supported the implementation of CSEF, outlining benefits to key stakeholders, defined as underfunded small to medium sized enterprises, and retail and sophisticated investors seeking greater diversification in their portfolios.
CMAC’s report recommended caps on the amount retail investors were able to invest, restrictions on the amount of advertising businesses could do, and also recommended that CSEF platforms must provide risk disclosure statements.
While he believes CSEF has the potential to change the tech sector in Australia, Freelancer CEO Matt Barrie told the Australian Financial Review that he is worried that the proposed legislation will be lip service rather than genuine reform.
As these reforms are aimed at the wider small business community, startups will be waiting to see whether the Budget will introduce any initiatives or reforms targeted at the startup community, given that they face a set of challenges different to those of small businesses. For its part, the Victorian Government fulfilled an election promise in its first Budget this week, announcing a $60 million startup initiative matching local entrepreneurs with mentors to help them develop their businesses.
Though the proposed reforms have given the business community something to think about, we must wait until the Budget is delivered next week to see the full details and make a judgement.