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Budget 2016: SMEs the deserved winners in Federal Government budget

Budget 2016: SMEs the deserved winners in Federal Government budget

Small to medium business are the deserved winners in 2016 Budget

Scottish Pacific’s Head of Debtor finance Greg Charlwood gives his thoughts on this week’s Federal Budget.

Small to medium businesses are deservedly the big winners of this week’s Federal Budget and we believe SMEs can and will deliver broader economic growth. Here are some of the key areas where we believe the Budget can have a positive impact.

Having supported SMEs in working capital since 1988, we are pleased to see the benefits for companies with a turnover of $2 million being extended to a sensible level of $10 million turnover, where we see it will have greater impact in terms of business investment and boosting job growth and employment.

We support the reduction in the company tax rate for SMEs (dropping from 28.5% to 27.5% for small incorporated businesses with up to $10 million turnover) as it should energise SMEs, encourage business investment and drive growth and innovation.

Our most recent Scottish Pacific SME Growth Index indicated a continuing decreasing trend of SMEs saying they were in positive growth mode (currently 58%, down from more than 62% a year ago), so the tax rate reduction is a welcome initiative to activate the SME sector which can drive growth in the economy.

The changes tightening contributions to superannuation may encourage SMEs to invest in their business (and potentially in other SME businesses) as their retirement fund - this is a great way to get a business exit-ready.

Scottish Pacific sees potentially good initiatives to encourage SMEs to help the young unemployed – this is further recognition by the Federal Government of the positive influence SMEs have on the economy.

The continuation (and extension) of the $20,000 asset write off incentive for SMEs (now applicable for those with turnover of up to $10 million) is welcomed, and while it’s not a ‘game changer’ on its own it further underlines the efforts to create a positive environment in which SMEs can invest and grow.

SMEs can spend to get depreciation benefits on small capital items, but it’s not a good business strategy to use working capital to buy assets.

Lastly, as a working capital provider that has supported Australia’s startups in getting new businesses off the ground, we welcome the budget’s initiatives to benefit startups, including enterprise tax cuts, an expansion to CSIRO’s accelerator program and changes to employee share schemes.

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