Small businesses rising up in Industry 4.0 space

Minister Michaelia Cash said the Australian government is helping businesses keep their money for further investments.

The Australian government is backing small businesses by increasing the instant asset write-off threshold from $20,000 to $25,000. This came into effect on January 30, 2019, along with the extension of the initiative for another year beyond its existing June 2019 end-date.

The continued support for small businesses will enable more than three million small businesses across the country, with an annual turnover of less than $10 million, to access the new $25,000 instant asset write-off from now until June 30, 2020.

Minister for Small and Family Business, Skills and Vocational Education, Michaelia Cash, said the increase and extension of this initiative will further improve cash flow for hard working Australian small business owners by bringing forward tax deductions and providing a boost to small business activity.  It also encourages more small businesses to reinvest in their operations and replace or upgrade their assets.

“Our government first introduced the $20,000 instant asset write-off in the 2015-16 budget. In the first year alone, more than 300,000 small businesses took advantage of this opportunity – this equates to an average of approximately 800 businesses per day making an investment through this initiative.”

Cash said when business owners are able to keep more of their money, they are able to invest back into the business, boost productivity, grow the economy and create new, local jobs.

So far, the government has delivered tax relief for incorporated SMEs, with turnovers of less than $50m per annum. These companies will move to a 25 per cent tax rate by 2021-22.

There has also been an increase to the rate of the tax discount for unincorporated small businesses, with turnover below $5m to 16 per cent by 2021-22, and an increase to the small business entity turnover threshold from $2m to $10m per annum, which has extended access to a range of tax concessions.

“Backing small business is part of our plan for a stronger economy to help them reach their potential and create even more jobs,” said Cash.

Keeping SMEs and start-ups in Australia, is also driving support from the federal government. Minister for Industry, Science and Technology, Karen Andrews, said to make accessing finance easier so that start-ups do not have to leave Australia to find investment capital, the government has put in place new tax incentives, such as the Tax Incentives for Early Stage Investors. The government has also enhanced venture capital tax concessions under the Early Stage Venture Capital Limited Partnerships.

“[The] government is working to ensure Australia continues to be a country where founders want to build and grow their start-up. This includes improving to access talent, finance and global markets,” said Andrews.

The Early Stage Venture Capital Limited Partnerships scheme provides fund managers and investors with tax benefits, including a tax exemption on an investor’s share of a fund’s income and gains.

To qualify, business must be established in Australia or in a country with which Australia has a double tax agreement, have a partnership agreement that ensures the partnership will exist for between 5 and 15 years, and be a limited partnership or an incorporated limited partnership.

The partnership program aims to stimulate the early stage venture capital sector in Australia by helping fund managers attract pooled capital so they can raise new venture capital funds of between $10m and $200 million to invest in innovative early stage businesses.