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Federal budget 2015: How will small business employers be affected?

Federal budget 2015: How will small business employers be affected? (Last Updated On: November 18, 2016)

Small businesses are big winners in the 2015-2016 Federal budget. The Federal Government has focused on turbocharging the economy and getting more Australians into work, through generous stimulus for small business and changes to childcare subsidies, to enable more skilled workers to return to the workforce.

Employsure has taken a look at how the budget will affect SME employers.

Big ticket items for small businesses

The budget provides generous tax concessions to encourage small businesses (those with a turnover of less than $2 million) to create jobs. According to the Government, 96 per cent of Australian businesses will be eligible for tax breaks. The big-ticket items are…

 –   Small business companies: get a 1.5 per cent tax rate cut from 30% to 28.5%.

–   Other small businesses: for the approximate 1.7 million sole traders, partnerships and other unincorporated small businesses (not run through companies), the budget provides a 5% tax discount of up to $1,000.

–   Tax breaks on business equipment: until 30 June 2017, life will be easier for small business because business equipment costing less than $20,000 will be 100% tax deductible. This can apply to as many items as you like – tables, computers, coffee machines, solar panels and air-conditioning. Any assets over $20,000 can be pooled together and depreciated at an accelerated rate.

–   Employee shares: tax concessions are being expanded on Employee Share Scheme to assist start-up businesses.

Subsidies for job creation and workers

–   Young people: to encourage businesses to employ young people fresh out of school or university, from October 2015 employees can volunteer for four week’s work experience (up to 25 hours a week). Employers who then offer that person a paid job can access wage subsidies of up to $6,500 over the first 12 months of employment.

–   Restart programme: to encourage greater participation of over 50s in the workforce, businesses may be able to access a wage subsidy of up to $10,000 over 12 months (reduced from 24 months) in relation to new employees who are over 50 and who have been unemployed for more than six months.

–   Childcare subsidies: to encourage more workers back into the workforce, the government will introduce a number of changes to childcare subsidies, with some childcare subsidies being paid directly to childcare providers. Additional subsidies will also be available to disadvantaged families, as well as a trial of subsidised nannies for shift workers in key roles (such as nurses and police officers) and remote areas.

The budget losers

The budget is certainly not good news for everyone. In particular, there is going to be a crackdown on the eligibility of fly-in, fly-out workers to Zone Tax Offset for working in remote areas.

From 1 April 2016, employees in the not-for profit (NFP) sector may also be hit by a reduction in their fringe benefit tax (FBT) exemption cap to $5,000. This FBT exemption has to date been seen as a significant draw card for NFP employers.

From 1 July 2016 foreign backpackers on working holiday visas will no longer qualify for the tax free threshold and will pay tax at a rate of 32.5% from the very first dollar they earn. This will generate significant revenue, but could make a ‘gap year’ in Australia less attractive and in turn cause a shortage of workers in industries (such as agriculture) which rely heavily on foreign backpackers.

From 1 July 2016 parents will also no longer be able to claim both employer-funded paid parental leave schemes and the taxpayer-funded government 18-week paid parental leave. It’s a remarkable change of policy from Prime Minister Tony Abbott, who went into both the 2010 and 2013 elections promising that eligible parents would be paid their full salary for six months. This generous paid parental leave scheme proposal has since been scrapped.

Author – Sam Martinic Employment Relations Consultant

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