By Leah Oliver, Minnik Chartered Accountants
Whilst spending in the areas of childcare, aged care, disability and mental health featured favourably in the 2021 federal budget, when it came to economic recovery measures for businesses there were notable exclusions.
At a time when businesses need policy stability, we were interested to understand what the federal government had in mind when it came to making the tax system less complex and easier to navigate, particularly as many businesses are restructuring in response to the economic impact of COVID-19. Streamlining capital gains tax, fringe benefits tax and superannuation legislations are areas where compliance costs can be reduced, with a longer-term goal of more substantial tax reform.
Instead, we received glossed-over mention of continued tax offsets for individuals and temporary loss carry backs for business. Entitling companies to claw back previous year tax liabilities where they are running at a loss, is exactly that – temporary measures that are purely timing – potentially prolonging the pain of many businesses that are no longer viable in this environment, much like the recent flood of benefits.
Australians are still adapting to life with snap lockdowns, continued uncertainty and stop-go travel restrictions. There is a clear need for tax laws to be revisited in line with pandemic induced work and lifestyle changes, such as working from home, declined use of public transport and restricted international travel for example.
Further support for business owners in the form of access to professional advice around viability of continued operations, debt management and strategic planning should have been on the list for the 2021 federal budget. Whilst tax concessions and cash boosts are welcomed, they are short term fixes, non-sustainable and don’t contribute to long term survival and growth. Now is the time for businesses to be obtaining advice around how to structure their affairs in the best way possible to plan ahead in the midst of the economic downturn.
Targeted support for specific industries such as tourism and businesses that have been tragically affected by international travel restrictions would have been a welcome feature in the federal budget, including how the government plans for gradual safe return to travel by businesses following the vaccine rollout. There was just under $60 million included in last year’s budget to help these businesses diversify their markets, this year however the tourism sector received little attention.
With one in five Australian jobs connected to international trade, many businesses kept a close eye on international trade negotiation updates, including those with China. For businesses whose survival relies on trade, the budget gives them insight into how the government is dealing with trade tensions and negotiations, giving them the opportunity to plan for changes and diversify to counteract negative impact. In this year’s budget, the Coalition is handing DFAT a modest funding boost, providing $198 million over four years for key foreign policy initiatives. A clearer broadcast around foreign liaisons was the expectation of many businesses in this predicament.
From a business perspective, the overall goal of sustaining economic stability and growth throughout the continuing pandemic and recession is a recurring theme that we saw coming out of this year’s federal budget. To support economic recovery there needs to be a much broader focus beyond purely economic and financial matters for businesses. The focus must extend to health, society and the environment, including non-financial disclosure requirements by businesses.