Julian Leeser (Berowra, Liberal Party) Share this | Hansard source

I am delighted to speak on the Treasury Laws Amendment (Accelerated Depreciation For Small Business Entities) Bill 2017. The bill implements one of the great measures announced in the 2017 federal budget in recent weeks. It is a very important measure that will help small businesses right across the country, particularly in my electorate of Berowra. The bill extends by 12 months, to 30 June 2018, the period during which small business entities can expand their accelerated depreciation rules.

There are around 15,000 small businesses in my electorate of Berowra, and they employ tens of thousands of people. Berowra businesses know that they can spend their own money better than the taxman can. Those small businesses in my electorate of Berowra keep telling me that they want tax relief. They want tax relief so that they can invest more in their businesses. They want tax relief so that they can employ more people. They want tax relief so that they can turn their small businesses into bigger businesses that have glorious nationwide reputations.

This government has a strong record of backing small businesses, helping them grow and deliver more and better-paying jobs. We have done this by cutting small business taxes, reducing the corporate tax rate to 27½ per cent for small businesses that have a turnover of up to $10 million, and that takes effect from 1 July 2017. And we are going to further reduce that to 25 per cent by 2026-27. We are increasing the number of businesses that are eligible for a range of small business tax concessions by raising the small business entity turnover threshold from $2 million to $10 million. Only those opposite, in the Labor Party, believe that a business with slightly over $2 million turnover—that is turnover, not profit—is somehow a big business. We on this side of the House have a greater appreciation for small business. Many of us have run small businesses. Many of us come from small business families. Many of us are in electorates like mine where the small business community is the absolute backbone of the electorate: it is the small business people who get involved in the P? it is the small business people who get involved in the charitable organisations; it is the small business people who employ people and give them an opportunity.

Our party understands that the best thing governments can do for small businesses is to reduce the regulatory burden and get out of their way. The coalition government has maintained its focus on simplifying small business paperwork and has committed to cutting red tape costs by $1 billion every year since we were elected. Our party has reduced the annual regulatory burden on small business and the community by more than $5.8 billion since coming to government. That exceeds our target every single year. And we are continuing to reduce the complexity and cost of complying with regulation. The National Business Simplification Initiative will tackle the burden of unnecessary regulation, particularly where there is duplication across the different levels of government—federal, state and local. It will improve access to government information and services for businesses by providing them in one place and with streamlined service delivery. We are developing a simplified business activity statement solution to save small businesses time and money on bookkeeping and reporting. These changes will allow small business owners to spend less time reporting to government and less time on their paperwork, and more time growing their business and with their families.

Let me talk a little bit about the instant asset write-off contained in this bill. Through accelerated depreciation, the 2017 federal budget delivers additional support to the nearly 3.2 million small businesses across Australia. All businesses can claim the cost of most depreciating assets if they are used for work purposes. The instant asset write-off measure allows small business with a turnover of up to $10 million to claim an instant deduction on capital equipment with a value up to $20,000. Prior to 12 May 2015, the immediate write off was only $1,000 for any asset purchased. If the asset was over the $1,000 cap, it would be depreciated over a set period or pooled in a small asset pool. This meant it could take up to 10 to 15 years to obtain the benefit for any large asset purchase. This measure was due to finish on 30 June 2017, before its extension in the 2017-18 federal budget. Small- and medium-sized businesses will now have more certainty that they will be able to immediately deduct the purchase of these assets first used or ready to be used by 30 June 2017 and 30 June 2018.

Additionally, assets that cost more than $20,000 and costs of $20,000 or more relating to depreciating assets can be allocated to a small business's general small business pool and deducted at a specific rate for the depletion of the pool. The rate of deduction is 15 per cent in the year they are allocated and 30 per cent in subsequent years. If the balance of the small business' pool is less than $20,000 at the end of the income year, the business can claim a deduction for the entire balance of the pool. As the pool depreciates all assets in the same way, small businesses do not need spend valuable time tracking each individual asset against different depreciation rates over time. The extension of the instant asset write-off will improve cash flow for small business. This will boost productivity and help small-business owners reinvest in their business. Improved cash flow will also give businesses the flexibility to hire more employees and pay staff more. It will also encourage small businesses to bring forward capital investment from future years to the current income year, renewing their capital base. That is something we so often see business generally in Australia underinvesting in.

This bill is a great boom for Berowra businesses. For example, hairdressers in Berowra could claim deductions on new flooring or equipment in their hairdressing salons. Take Real Men's Hairdressing—a great name—in Pennant Hills and its owner and operator, Aman Hamid. This is an example of a great Berowra small business in my electorate that stands to benefit from this measure. If you want to see how good he is, you only need to look at my haircut, because this is the place I get my hair cut. They will be celebrating their third year of operations in June this year and they will benefit by being able to depreciate the clippers that they use every time to shear my head.

It is not just hairdressers that will benefit from this; tutoring business can benefit from instant deductions. For instance, they could deduct an interactive whiteboard, as so many more of our tutoring businesses are using. I want to talk to you about one of the great businesses in my electorate that does tutoring. Sponge Education is a business started by a remarkable 26-year-old woman, Sarah Carmen. She had an idea for a tutoring business—having had her own experience of the HSC and having done a science degree at university—realising that part of the success of tutoring was not just the technical tutoring but also looking after the mental health of those students who are under the pressure of doing HSC. Sarah Carmen has now taken this business to employing 50 tutors and providing services to 200 students across my electorate. She tutors in maths, English, science, geography, history and music, and I think her business is so important because of her understanding of the important mental health aspect. If a student has good mental health, they will do well at school. I look forward to seeing the way that Sarah will use the instant asset write-off to help her business.

This is a great boom for architecture firms. Great architecture companies like Stanton Dahl, which was started by the great Phil Stanton back in the 1980s, a resident of Pennant Hills in my electorate. He is a person who has designed and built so many of our community's institutions, from churches and school halls to aged-care facilities, automotive businesses and homes for people. He has been in practice for over 30 years. It is a really extraordinary business. He and his firm can claim deductions on new drafting tables and equipment, for instance. I spoke recently to Geoff Lloyd of Hardwood Mills Australia in Hornsby, which provides small portable sawmills in my electorate. He said to me that he saw huge benefit in the instant asset write-off. He said many businesses lost a lot of confidence during the global financial crisis, and having this measure promotes confidence in the community that businesses can make decisions and buy assets and invest in their businesses with greater certainty. He said: 'This supports our business. I think it is great and it should stay. We agonise over every spending decision. I have bought many assets for our business, because of the asset write-off, that we would not have otherwise.' He also outlined that, when small businesses purchase more or better assets locally, communities and other businesses directly also benefit from a flow-on effect of the purchases. Hardwood Mills recently installed a crane on one of their trucks. Geoff Lloyd explained that he does not have a licence to install the crane, so, in addition to the purchase itself, Hardwood Mills hired a business to install it. This shows the clear flow-on effect in stimulating our economy, increasing investment, growing businesses and creating more jobs. This is a purchase they would not have made without the asset write-off of $20,000.

As the son of an accountant, I know how important accountants are in helping small businesses; and I know that accountants, more than anyone else, know the health of our economy and the health of small businesses. Accountants are not just there to do tax; a good accountant advises you how to build and grow your business. And so I talked to a couple of accountants in my electorate to find out what they thought of these particular measures. I talked to Craig Lawton, an accountant from Glenorie in my electorate. Craig said: 'This policy is really useful for many small businesses and I hope it carries on. It has got a very strong endorsement in the accounting community.' Pedro Sasso, the director of Shuriken Consulting at Hornsby, another one of our great accounting firms and a small business as well, said: 'The higher up-front deduction will allow small businesses to lower their tax bill. In a low-growth environment the immediate write-off incentive allows small businesses to purchase assets with the immediate write-off helping to stimulate a growth. Not only does the immediate write-off benefit existing businesses, but it also benefits start-ups and innovation companies as it increases deductions and helps to lower tax to be paid, allowing greater funds available for business growth. This will allow an increased chance for these start-ups to succeed in business.'

So we have great practical endorsement from a range of Berowra businesses, Berowra accountants and small businesses more broadly. This is a very important measure to allow businesses to invest in their business and to do so more quickly. It stimulates not only the growth of that small business but the broader economy around it. It is a really terrific proposal and I am delighted to be here to speak on it today.

And what have those opposite had to say whenever we talk about small business? I think they see small business as not that important. The Labor Party almost see small business as part of a class war. They have constantly had a go at the small business tax deduction that we gave earlier in the year because they think a business with a turnover of $2 million or more is a large business. Well, as most of the businesses in Berowra, which have turnovers a little bit larger than that, can tell you, they are not large businesses. A $2 million turnover makes you a microbusiness. We need governments to understand the position that small business is in, we need governments to support small businesses, we need governments to be in a position to understand that small businesses are better to deal with their own money themselves. Small businesses know how their businesses run and we should give them the incentive to invest now and to grow their business. That is what this particular measure does. That is why I am delighted to support the Treasury Laws Amendment (Accelerated Depreciation for Small Business Entities) Bill 2017 and I commend its passage to the House.

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