For a long time budget announcements have let the business community believing that you either turn over $2m or you may as well be BHP. Most of the Small & Medium Enterprise (SME) benefits announced have applied to the “S” part of this large segment, but this budget breaks that trend.
When a medium business fails, they often find themselves on the business pages and “x” number of jobs lost is noted in the by line. So it is refreshing to see the government acknowledge that Medium businesses require a hand from time to time to.
As observed by my Virtual CFO Association fellow executive member Colin Wright, in the last ten years 1m jobs have been created, 1.4m from the SME sector whilst big business shed 400,000 according to Andrew Charlton, economist (Oxford Rhodes Scholar) and Director of AlphaBeta Advisors on Sky Business last night.
Reduced Tax payments puts more cash in your business
This hand comes in the way of a 2.5% tax deduction if your sales are sub $10m. Increasing the concession ceiling from $2m to $10m will put some cash back in medium enterprises and the government is basically saying
“Here is some cash, please re invest in your business by buying fixed assets, and we’ll give you an extra kick with an upfront deduction for some of those”.
Employee young talent
In a “Two birds one stone” move the new PaTH program aims to cure SME’s biggest complaint, finding job ready talent by increasing the soft skills of the unemployed as they transition into work. For all the negativity likely to be associated with paying an intern a low wage, the harsh reality is that if some one is employed and can’t perform basic duties the cost on the employer is far greater than just their wage. Scott Morrison will hope that a knock on effect will be a reduction in unemployment.
With many of these schemes though, the cost of applying for and managing them often acts a barrier to using the service. PaTH seeks to solve this with a hefty $10k rebate if the employer chooses to employee the intern after their term. A nice return on investment that may make the effort worthwhile.
Overall this budget does not dish out the hand outs one would expect from a quasi pre- election budget, but it is welcomed news for clients of Virtual CFO firms and members of the VirtualCFO Association.