Ann Sudmalis (Gilmore, Liberal Party) Share this | Hansard source

I rise to speak to the House on the Tax Laws Amendment (Small Business Measures No. 3) Bill 2015. There is nothing more important for jobs growth than the development of national economic health for small business. In Gilmore, there are hundreds of mum-and-dad businesses—which, in good times, are more likely to start employing someone, even if it is only part-time in the beginning. Having been a small-business owner for many years, and talking with the owners of small businesses during that entire time, I got a good sense of the changes that need to be made to make employing people easier and cost effective. In my experiences talking to small businesses all over Australia as I developed sales for my product, it was clear that many government processes could be changed that would ultimately lead to better circumstances for business owners and for potential employment. During the Labor government's disastrous carbon tax debacle, I doorknocked dozens of businesses whose business bottom line was so badly impacted that they had to cut back on their employment of casual staff as one of their survival techniques. This proposed amendment to the tax laws is a great initiative to help small businesses to recover some of the losses they sustained under the previous government's carbon tax policy—which, incidentally, Labor plans to reintroduce at the next election.

The tax discount for unincorporated small businesses is part of the package of measures to help business confidence to grow and to establish a better employment scenario. This measure will provide individual taxpayers with business income from an unincorporated small business with a five per cent discount on the tax payable on the taxable income from that source. The discount, unfortunately, is capped at $1,000, but I know businesses that will welcome that absolutely. There are many businesses in Gilmore who will be able to benefit from this tax discount. Some are the locations of my regular village visits held throughout the year, and they include: the Bawley Beach Cafe, Oscar's Cafe, Bomaderry Bakehouse, Burrill Lake Newsagency, By the Beach Cafe in Callala, Cambewarra General Store, Jervis Bay Feeds, Huskisson Bakery & Cafe, Stone Wall Cafe, Merry Beach General Store, Breakers Cafe, Slice of Life general store, The Shoppe Shell Cove, Mountain Side Meats, Mellies Cafe Gallery, the Porthole Cafe, the Bluedog Country Cafe, and the Werri Beach Fish Shop. I have had coffee in every single one of them—and sometimes I have managed to actually eat there as well.

This measure will give a tax cut to the large majority of unincorporated entities for the 2015-16 income year and beyond. Small businesses tend to operate as sole traders, partnerships or trusts. Seventy per cent of small businesses are unincorporated, so this tax benefit for them is a great move. I could not be more proud than to be part of a political team that really addresses the needs and issues that start the process of assisting small businesses to grow and to thrive. This tax discount will increase cash flow for unincorporated small businesses with a turnover below $2 million and, let me tell you, Mr Acting Deputy Speaker, this would be the majority of small businesses in Gilmore—in fact, most are just barely breaking even, so any assistance at this time will be a welcome reprieve. Certainly, having to pay a little less tax will be warmly welcomed.

There are almost 9,000 small businesses working and employing people in Gilmore. Almost 80 per cent are in the industry areas of accommodation and food services, arts and recreational services, wholesale, retail, transport, warehousing, IT and telecommunications. The 80 per cent also includes hire businesses, tradesmen and tradeswomen, real estate and other industries associated with housing. During May and June I was determined to hear from my local businesses from a grassroots perspective, particularly after the budget measures. My team and I went and talked directly to them. For the most part we discussed the instant tax write-off for purchases of up to $20,000 for each piece of equipment. We all know how well this initiative was received. As I have mentioned previously, TCC Accounting Services in Milton was already setting up forums for other businesses in the area to make the most effective use of that particular aspect for their own enterprises. Some of the places I visited during that time were Kiama Country Store, Synergy Beauty Therapy in Kiama, Milton's Sarah Gabrielle boutique and the Akwa Surf shop. In Ulladulla, I spoke with the owners of Walking on Water & Ulladulla Surf Schools and Kings Point Windows & Glass. Finally, I visited Addison's Seafood Grill & Bar and Green Poppy in Shellharbour. Paul Richards is a local tiler. With his business, ALM Services, he decided that this was a policy that was definitely in his best interest. He used the new write-off for assets and purchased a second-hand ute—a glowing white ute that I saw when I visited him the other day. Instead of having to write this off over time, it can be fully taken into account for his tax return for the 2014-15 financial year.

The second part of the amendment to the bill is directly related to the set-up of a new business or the conversion of an unincorporated business to a different structure. There are many professional service costs that can impact heavily on the set-up of a business. It is at this very time that the cash flow for initiating a business is at its lowest. I recall setting up the structures for the fudge business. Way back then we had to go and negotiate with multiple banks. We had to go and talk to them, pay mortgage fees and transfer fees, move the loan from one bank account to another account, set up another account, buy the equipment, pay all of the legal fees and pay all of the registration fees. By the end of it, we had absolutely no cash left. In order to buy the stock that was left on premises, we actually had to raid our children's piggy banks . Thank goodness one of the banking institutions gave us an immediate overdraft facility, or we would have been absolutely cactus.

What kind of expenses will now be immediately deductible and will absolutely help a growing business? These include advice on appropriate entity structures: is it right for you to have a company, or is it right for you to be a sole trader? And there are legal expenses, which are ever increasing, and insurances. Should have a company, a trust or a partnership? And there are ASIC fees. If anybody has actually tried to register a business name recently, it is torturous. We really have to do something about that as well. Stamp duty on the transfer of assets can now be written off straightaway. The cost to convert your business structure can be written off straightaway. When you get relevant information in connection to establishing your business, like going to the proper authorities, getting the right placements, looking at work contracts, you can get all of those costs deducted straightaway. Sometimes you are looking at a slightly bigger business and you need to have a prospectus, particularly if you have no history in borrowing money from the bank. If you go to them and say, 'I have a great idea for a business,' they do not open the door and say, 'Here you are; here's some cash.' You have to give them a business proposal. Sometimes you need a little help to prepare that; otherwise, there is no way you are going to get money. That is a really good thing to be able to write off straightaway.

What currently happens to these expenses? At the moment, it takes five years to write off those expenses. That is not very helpful for a start-up business. How does it help with a new business? I know that 30 years ago, give or take a couple of years, when we were setting up the fudge business, being able to write those off in the first year would have been most welcome. After we bought new vehicles—actually, we leased them, as we could not afford to buy them—it would have been really good for our cash flow. An immediate deduction for professional expenses helps the cash flow when your business is just starting, because, believe me, that is a tough time. In our beginning years, we had to work between 13 and 14 hours a day in order to make our business viable, to pay some of the mortgages off, to pay some of the loans that we had taken out to pay the mortgages, and to pay some of the credit cards that we had to take out in order to pay the personal loans off in order to pay the mortgages off. It was just a rolling process of debt.

So I think this is a wonderful initiative. Because we now know there is a lot more excitement about business, excitement about the economy, one of our local supermarkets recently decided to invest in the land that they had bought. It had been sitting there with a big fence around it for some time. They finally decided that things are so good now that they would turn the first sod. They were there the other day. I was there with a whole bunch of people—the local mayor and the pseudo-mayor of the area in Sussex Inlet—and we turned that first sod. They are a beautiful Greek family. They blessed the land; they blessed the shovel. They even had a chook for the builder, which, apparently, is a Greek tradition, which I had never heard of before. The builder said, 'What do I do with a chook!' It was alive. Anyway, that was an interesting experience. The Kapetanos family have had this project in mind for a long time, but now, finally, they have the confidence to initiate this project and to invest in their local area. Ultimately, their supermarket will double in size, and they will be able to employ more people.

While heartily congratulating the Kapetanos family, I was privileged to meet Kiaya Fleming. She is setting up a brand new business, Be Indulgent. This enthusiastic young woman has decided to invest in herself, to test her ideas and set up her small boutique gift business. I wish her the very best. Being a business person demonstrates a degree of personal risk. However, there is no better time than right now to start up and not have too great an impact on your cash flow over time.

I met Colin Brown on one of my village visits. He has a business called Lumo Solutions. He makes amazing fluorescent hard plastic stuff. Instead of having to put electrical lights on walkways, jetty edges and harbour edges, this solar-powered fluorescent plastic product is bolted and glued to the ground. It collects all the sunlight during the day and it fluoresces at night, so the edges of the walkway, the jetty and the quay are all illuminated. It is also a safety measure. So he is going around, flogging this product, which I think is wonderful. He wants to set up a supply arm in Gilmore and he also wants to make this a possible export item. And guess what? The plasticthing is a recycled product. It is an amazing invention.

Any person wishing to use their entrepreneurial skills to set up a business has a great opportunity right now to reduce their initial cost. What a bonus for a start-up business! Finally, we are helping to take taxation benefits into the current century. It has been absolutely absurd in this day and age to only have a fringe benefit available for a single, portable electronic device. How many members in this House actually carry two phones? So do business people. This change is long overdue and it makes perfect sense. Currently, the fringe benefit is only available if the devices do substantially different tasks. Maybe 10 years ago that might have been real but not now. With the rate of technological change, that is simply ridiculous.

The proposed amending legislation will allow small businesses an FBT exemption for more than one qualifying work-related portable electronic device. And it can only come as fast as possible, because so many people will benefit. This measure does not introduce a new FBT exemption; it just removes the restriction that currently applies in relation to the existing process.

Of course, it will only apply to businesses that meet the ATO definition of being small—that is, their aggregated turnover is less than $2 million per year, which I am pretty sure for the Gilmore electorate would probably mean every single one of them. If only I had a few more businesses that turn over more than $2 million I would be very happy!

Nationally, this means more than 30,000 small businesses will benefit. There will certainly be a significant number in Gilmore. I am proud that we have legislation in place to help small business to thrive, grow and then employ people. This side of government has innovation grants. It encourages individuals to follow their dreams, put their ideas to the test, build a business and grow with the outstanding Aussie attitude: nothing is impossible. And, in the words of John Flynn, founder of the Flying Doctor Service: 'If you have a good idea, nothing can stop it.'

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