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Insolvency and SME tax breaks on the agenda at Tax Forum

SMEs continue to see insolvency as their biggest concern, with experts calling on the Government to implement tax breaks for  small businesses at today’s Tax Forum.

According to research conducted by Bibby Financial Services, many SMEs are facing increased profit pressure and survival issues.

Bibby Managing Director Greg Charlwood said small businesses deserve special consideration at the Federal Government’s Tax Forum held today and tomorrow at Parliament House, to examine how business tax reform can increase productivity.

“On almost all measures, small businesses have greater pressures now than a year ago. Our Bibby Barometer survey of small business proprietors showed they are under higher stress and have a more uncertain cash flow than a year ago. They face longer delays being paid and are coping with more difficult market conditions, staffing issues and access to finance.”

“Bibby’s survey and recent insolvency trends indicate the extent to which these pressures threaten Australia’s business productivity,” Charlwood added.

The Bibby Barometer found one fifth of small businesses would become insolvent if they lost their two largest customers or if their two largest suppliers put them on cash-on-delivery status. A further 43 percent would be forced to downsize if either of these two events occurred. The survey revealed only 27 percent of SMEs are confident they could survive the tightening cash flow these events could cause.

According to insolvency statistics released by the Australian Securities & Investments Commission (ASIC) early this month, companies entering into external administration across Australia reached the highest level in the June 2011 quarter, since December 2008. ASIC figures showed 2,656 companies in Australia entered external administration in the June 2011 quarter compared to 2,275 in the March 2011 quarter.

Commenting on the statistics, Charlwood said small businesses deserve special consideration in any proposed government changes affecting business.

“A major concern is the high sensitivity small businesses have to bad debts. Almost a quarter of the business owners we surveyed had experienced a bad debt in the past 12 months.”

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Lorna Brett

Lorna Brett

Lorna was Dynamic Business’ Social Web Editor in 2011/12. She’s a social media obsessed journalist, who has a passion for small business. Outside the 9 to 5, you’re likely to find her trawling the web for online bargains, perfecting her amateur photography skills or enjoying one too many cappucinos. You can follow her on <a href="https://twitter.com/#!/dynamicbusiness">Twitter @DynamicBusiness</a>

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