As anticipated, there were no initiatives directly impacting the franchise sector following the announcement of The Budget on 8 May 2012. Generally for small businesses the biggest news is that the Government will introduce a loss “carry back” initiative in 2012-13 to provide tax relief to companies struggling due to the high dollar. However, the government has foregone the anticipated corporate tax rate cut that was to be funded by the mining tax.
The new tax relief will allow businesses to ‘carry back’ losses, to offset past profits and get a refund of tax previously paid on that profit.
Federal Small Business Minister Brendan O’Connor said the reform means businesses can use their tax losses now- when they need to –rather than in the future when their businesses are performing better.
The Government estimates the new loss carry-back will benefit around 110,000 companies in its first four years, of which it’s estimated around 90 per cent will be small businesses.
The carry back relief comes as retail prices in the March quarter experienced their biggest fall – 0.9 per cent quarter-on-quarter- in almost three decades of ABS records. It also comes as small business insolvencies reach record levels.
ASIC statistics show 1,123 businesses were placed into administration in February, compared with 518 in January.
The highest previous figure was in March 2009 when 1095 businesses went into administration (the statistics were first introduced in 1999).
Another positive to come out of the Budget was the announcement of $2 million to fund an Australian Small Business Commissioner.
The new office is set to open on 1 January, 2013. The FCA has cautiously supported the creation of this office on the basis that it does not interfere with franchising regulation and that it provides another opportunity for national systems to use the low cost dispute resolution capability and that it doesn’t create extra regulatory burden.
There were several other areas the Budget covered which will also be of interest to small businesses:
• The Government will provide $27.5 million to extend its Small Business Advisory Service (SBAS) program for a further four years to continue supporting small businesses with advice and assistance.
• From 1 July 2012, small businesses will be able to immediately deduct the cost of any new business assets costing less than $6,500.
• Small businesses will be able to also immediately deduct the first $5,000 of a new or used motor vehicle, purchased from 1 July this year.
As a result of this Federal Budget, there are many changes that are set to take place over the next few financial years. For more information about how anything in the 2012 Budget may affect you or your business, or for any other tax or accounting related queries please contact the team of accountants and tax agents at The Quinn Group. Submit an online enquiry for more information, or call us on 1300 QUINNS (1300 784 667) or +61 2 9223 9166 to book an appointment.
