Karen McNamara (Dobell, Liberal Party) Share this | Hansard source

I rise to support the Tax Laws Amendment (Small Business Measures No. 3) Bill 2015. This bill provides for amendments to various taxation legislation, in order to provide tax relief and reduce red tape for small business. The reality is that, if we want more stable jobs that provide meaningful work, we need to enable stronger small business. This government acknowledges the vital role that small business plays in the Australian economy. Australia's two million small businesses produce more than $330 billion in economic output and employ over 4.5 million people. The Minister for Small Business, the Hon. Bruce Billson, stated, 'Australians are well known for their enterprising spirit and their willingness to have a go,' and he was absolutely correct.

The coalition has a strong track record in supporting business. We understand that you cannot have a strong and healthy society without a strong economy to sustain it, and that you do not have a strong economy without profitable businesses. On the New South Wales Central Coast, small business is collectively our largest employer. In Dobell, there are 8,703 businesses each employing between one and 20 people. Small business plays a crucial role in ensuring that there are local jobs available for mums and dads, school leavers and mature Australians returning to the workforce.

We want to see business thrive and grow. At the heart of our economic plans for growth is small business. The 2015 budget is focused on growing jobs and helping small business innovate and grow. The $5.5 billion Jobs and Small Business package is the biggest small business package in our nation's history. This package will create the right conditions for small businesses to thrive and grow, and it will assist Dobell's 8,703 businesses to invest more, grow more and employ more.

In the words of the Business Council of Australia:

The budget is without doubt a shot in the arm to small business, and creates a better environment for business confidence that will drive investment, job creation and economic growth.

As the Minister for Small Business stated when he introduced this bill:

Small business is the engine room of our economy. The contribution of the hardworking women and men of small business cannot be understated.

This bill contains three additional measures to support small business as part of the 2015 budget $5.5 billion Jobs and Small Business package. These measures provide amendments to various taxation laws to provide tax relief and reduce red tape for small businesses. This includes the provision for unincorporated businesses with an annual turnover of under $2 million to receive a five per cent tax discount, capped at $1,000 per tax-paying business owner. This will benefit approximately 70 per cent, which is more than two-thirds, of Australian small businesses. This bill will ensure that all small businesses are entitled to a tax cut.

Other features of this bill are the provision for immediate deductibility of professional expenses for small business. Presently, there are some expenses related to starting a business that have to be depreciated at 20 per cent of the original cost over a five-year period. An example would be legal costs or costs associated with raising capital. This bill will allow for such expenses to be immediately deducted instead of depreciated over five years. Also this bill addresses reducing red tape within the fringe benefits tax system by expanding the FBT exemption for work related portable electronic devices for small business.

Only the coalition government understands the varying needs of Australian small businesses. We know that one size does not fit all, and our budget measures reflect this. With the introduction of the three measures in this bill, five out of six of the small business measures from the budget package have been introduced into parliament. The sixth and final measure will enable small businesses to restructure without facing an immediate capital gains tax liability. That bill is scheduled to be introduced later in the spring sitting.

The government are committed to ensuring that Australia is the best place to start and maintain a small business, and our Jobs and Small Business package is creating the right conditions for Australian businesses to thrive and grow. As stated by the CEO of the Finance Brokers Association of Australia, Mr Peter White:

Tax breaks for small business will help businesses expand and create jobs while the Jobs for Families will ease the burden on the household budget and relieve pressure on mortgage repayments.

In detail, the three new measures contained within this bill provide, firstly, under schedule 1, provisions for a five per cent tax discount for approximately two-thirds of Australian small businesses which are unincorporated. This measure will provide tax relief to thousands of small unincorporated businesses across Australia. Owners of unincorporated small businesses will receive a five per cent tax offset on their small business income. This discount will be capped at $1,000 per individual business owner in an income year, and it is delivered as a tax offset, providing a tax cut to the large majority of unincorporated entities for the 2015-16 income year and beyond.

Small businesses predominantly operate as a sole trader, a partnership, a trust company or a combination of these. Currently, unincorporated business income is taxed at the owner's marginal rate of personal income tax. This feature of Australia's tax system means that a company tax cut will not benefit unincorporated businesses, so all the tradies who operate as sole traders, the mum-and-dad business partnerships and the family businesses operating through a trust would miss out. This tax discount will contribute to increased cash flow for unincorporated small businesses with turnover below $2 million and will have a cost to revenue of $1.8 billion over the forward estimates.

The New South Wales Business Chamber have welcomed the benefits of the cut in the company tax rate by 1.5 per cent for incorporated entities and the tax discount of five per cent, up to $1,000, to small unincorporated entities. Additionally, they are of the view that this may facilitate capacity for the small business owner to employ, to take on an apprentice or to extend the hours of a current employee. They also noted that these are the measures that will be well received in regional Australia, where unemployment is high and job opportunities are limited.

Schedule 2 of this bill will provide immediate deductibility of professional expenses to small businesses with an aggregated turnover below $2 million. Previously, such expenses had to be depreciated evenly over five years. This will potentially affect businesses that incur expenses for professional advice, taxes, fees and charges from Australian government agencies. These expenses are commonly known as the 'blackhole' expenses. This includes those in the process of starting a new business and those intending to start a small business which is not connected with a larger business. Providing an immediate deduction for professional expenses increases the cash flow for business start-ups as soon as they generate taxable income against which to make the deductions. This proposal will take effect for expenditure incurred in the 2015-16 income year and beyond and will have a cost to revenue of $30 million over the forward estimates.

Schedule 3 of the bill aims to reduce the compliance burden for small businesses within the FBT system by expanding the FBT exemption for work related portable electronic devices for small business. FBT applies to certain cash benefits such as the provision of free or discounted goods and services—including, for example, car parking and entertainment—that are provided by an employer to an employee in substitution for salary and wages. FBT was introduced in 1986 as the means to tax such non-cash benefits and, in doing so, endeavours to maintain the fairness and integrity of our tax system. In its 2014 report, Review of tax impediments facing small business, the Board of Taxation noted stakeholder concerns about the complexity of FBT and the disproportionate compliance burden it placed on small business when compared with larger businesses. Currently, employers can exempt one qualifying work-related item per FBT year, where the item is substantially different from other, exempt work-related items. The proposal within schedule 3 seeks to simplify the current rules and provide employers with more flexibility. Schedule 3 also provides an FBT exemption for small businesses that provide their employees with multiple work-related devices, even where the items have substantially similar functions. This applies to small businesses that have an aggregated turnover of less than $2 million per annum. This will create a red-tape reduction and compliance saving for many small businesses, and will provide encouragement and certainty for small businesses to provide their staff with all the necessary tools to grow, to build their businesses and to have a go. This measure will commence at the beginning of the next FBT year on 1 April 2016.

This bill builds on the successful passage of the first two bills through the Senate confirming that all small businesses will have access to an immediate tax deduction for assets costing less than $20,000, as well as the 1.5 per cent tax cut for small companies with a turnover of less than $2 million. I am a committed supporter of small business, because I understand and I know firsthand how much they contribute to our local communities and to our economy. I appreciate and understand the opportunities which a thriving small business can create in the electorate of Dobell. I am proud to be part of a government that is providing these opportunities for so many people who want to have a go and start a new business. As previously stated, the $5.5 billion Jobs and Small Business package is the biggest small business package in our nation's history. It is all about helping Australians have a go. It is about support for those who have the will, vision, and drive to start a new small business. This is especially true in regional areas, such as the New South Wales Central Coast, and particularly in my electorate of Dobell where, as I have mentioned before, collectively, small business is our largest employer. Since my election, I have been working alongside many of the small businesses in Dobell to identify and address the barriers that prohibit growth and employment opportunities. It is estimated that this bill will assist approximately 95 per cent of Dobell's businesses to invest more, to grow more and to employ more. Our support for small business is matched with support for job seekers. This is why we are helping all Australian participate through over $330 million in targeted spending on new job initiatives. This is targeted at employers and job seekers to support the transition into work. We have also introduced incentives for employers to help mature-age job seekers over the age of 50 to get back into work.

While it is businesses which create jobs, there is a need for government to reduce the impediments and to encourage the right conditions for Australia's small businesses to grow and to become more productive. This bill provides other means to achieving this. Reducing the tax rate for more than 90 per cent of incorporated businesses with an annual turnover of under $2 million is definitely a game changer; and allowing small businesses with an annual turnover of under $2 million to immediately deduct each and every asset costing less than $20,000 that they purchase from 12 May 2015 until 30 June 2017 has been the encouragement that many need to re-equip and update. Only the Abbott coalition government has a responsible, long-term economic plan that will grow the economy and fix Labor's mess. Statistics released by the ABS on 29 June 2015 revealed that the Abbott government has overseen a period where the number of jobs in small business has increased by 46,000—this is in contrast to the loss of almost half a million jobs in small business under the Rudd-Gillard-Rudd government. In addition to this great news, small business start-ups are up by 18.17 per cent, and small business closures are down by 12.5 per cent. These are positive indicators of green shoots in our economy. The NAB Monthly Business Survey for May 2015 reported that 'the recent federal budget and interest rate cut appears to have had a positive impact on business confidence', and that 'this the highest level of confidence since August 2014'. This government has a plan for our future and is keeping our commitments to the Australian people.

Another thing we have done is to secure free trade agreements with China, South Korea and Japan. This is also very positive for many of the small businesses in Dobell, as it is allowing them an opportunity to grow overseas as well. Our Jobs for Families reform is about delivering a simpler, more affordable, and more accessible childcare system, giving parents more choice when it comes to balancing work and family. I well recall, with much affection and great appreciation, the enthusiasm of the now Minister for Small Business as he campaigned with me in Dobell during the 2013 election campaign. He projected his support and enthusiasm for small business, which inspired and gave hope to the many small businesses that he met with in Dobell. I would like to congratulate the Minister for Small Business for keeping the commitments he made to my electorate, and for the outstanding work that he has done. I commend this bill to the House.

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