A lack of political clout has cost small business yet again.
The Abbott Government scrapped the mining tax for Australia’s big resource companies, but did small business no favours by abolishing the tax concessions linked to it.
The changes were flagged during the election, but small business leaders say it was done in a way that was costly and disruptive to their members.
“The Coalition have said that they would be small business-friendly, they understand we are the backbone of the economy, that we employ a lot of people – all those sorts of things – and they would do anything they could to make sure our lives were easy enough so we could run our business, and they’ve done the opposite with this decision,” said Peter Strong, the executive director of the Council of Small Business of Australia (COSBOA).
The Coalition has scrapped the tax concessions linked to the mining tax, including the company loss carry-back provision, which allowed loss-making businesses to claim back tax they’d paid in previous profitable years.
Also cut were accelerated depreciation allowances or asset write-offs.
“If there’s a tax white paper coming out, why didn’t they leave these provisions in place until the tax white paper came out?” Mr Strong asked.
“Unless they intend to do a lot more changes between now and the end of next year and ignore the tax white paper. They’re being very ambiguous around this.”
Small business groups say it could affect up to 400,000 businesses.
“The broad base of small business are all affected by it because the concessions that were there were good concessions, and they had an a advantage to business in terms of managing its cash flow,” said Greg Hayes, a director at accountancy firm Hayes Knight.
However, the Government has pressed ahead with the strategy signalled during the election, abolishing the carry-back provisions from July 2013 and the asset write-off provisions from January – the middle of last finance year.
“It’s been long understood, we’ve been absolutely plain and upfront about that and I’m surprised people find that as a surprise,” said small business minister Bruce Billson.
‘Not fair, not unusual’
What has angered small business is the Government’s decision to abolish the concessions without consultation, when the scrapping of other politically sensitive handouts like the Schoolkids Bonus have been delayed.
“The difficulty with it is that you’ve already got businesses who’ve lodged their tax return for the 2014 year, possibly claimed the loss carry-back rules, possibly claimed sort of accelerated depreciation and now find themselves – that they’ve lodged an incorrect tax return,” added Greg Hayes.
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“That’s a discussion that we’re having among the council members as to what this might mean,” Mr Strong said.
“I would suggest that this decision, well I’m hoping this decision, was made without consulting those champions of small business, because if they had been consulted, it wouldn’t have happened.”
However, Mr Billson says he was consulted on the changes.
“Yes, I was, yes, I was, and I made the point that our ambition was to have these measures in place much earlier. We don’t have control over the Senate,” he responded.
Clive Palmer certainly did not insist on preserving the concessions, so small business finds itself in a familiar predicament.
“Is it fair? No, it’s probably not. Is it different to what’s happened in the past over many years and in many situations? No, it’s probably not,” said Mr Hayes.
A lack of political clout – it is not a problem big business can identify with.