What’s In The Budget For Small Business?

What’s In The Budget For Small Business?

The Federal Government delivered its budget on 10 May, 2011. So what’s in it for you? There were several items of interest to business, but the jury is out on whether the government’s budget will assist you in the short term.

Payg tax changes

The government will provide additional cash- flow benefits to small businesses by reducing income tax instalments paid under Pay As You Go (PAYG). This change will mean a $700 million cash-flow benefit from lower tax payments in 2011-12.

PAYG instalments in 2011-12 will be set at 4 per cent above a small business’ taxable income for the previous year, half the statutory rate that would otherwise have applied. This is a one-year benefit and the statutory rate will apply as normal from 2012-13.

The depreciation and PAYG changes will apply to all small businesses, including sole traders and businesses operating through trusts, partnerships and companies. These changes are aimed at making tax simpler for small business, while increasing cash flows so they can grow their businesses.

Australian apprenticeships

There will be $100 million over four years to assist industry in developing and implementing strategies that lead to the incorporation of competency-based progression in Australian Apprenticeships. Apprentices will therefore be graded on skills and competence rather than being a first, second, third or fourth-year apprentice. This will provide massive challenges for the industry, including the role of training providers.

There will also be more than $100 million over four years to provide mentoring support services to Australian apprentices. The government will also review the Australian Apprenticeships Incentive Program to better target incentives.

These moves should be welcomed by the industry, as apprenticeships are vital to the future of the industry.

Modern awards

The government’s announcement to implement competency-based progression in Australian apprenticeships will affect the modern award system with part of $100 million over four years being directed towards the development of a legal clause to be incorporated into modern awards. The government has indicated that it will consult with industry on how it expects to progress towards competency-based progression. This provides an important opportunity for the industry to reshape the training agenda in the future, given the skills shortage issues.

Workplace health and safety

The government will provide $14.7 million over two years to implement a nationally harmonised model for work health and safety laws within the Commonwealth’s jurisdiction by the end of 2011. The funding will be directed towards education activities and service delivery, including harmonised guidance material and reporting.

Skilled migration

The government will increase the 2011-12 Migration Program to 185,000 places, up from 168,700 places for 2010-11. It will also allocate to the regions 16,000 skilled migration places, together with Regional Migration Agreements for communities with skill shortages.

Training reform

There will be a review of the Commonwealth’s $1.4 billion per annum investment in the National Agreement on Skills and Workforce Development and development of a whole-of-government commitment to training.

An amount of $1.75 billion will be spent over five years from 2012-13 under a new national partnership with the states and territories, conditional on reforms to the Vocational Educational Training (VET) system.

Workforce participation

There will be $80 million for additional training places for single and teenage parents and $20 million to ensure disadvantaged job seekers can access the Australian Apprenticeships Access Program.

The government will extend the ‘Earn or Learn’ requirements and eligibility for Youth Allowance to unemployed young people aged 21, and increase their rewards to work.


The government has provided funding to implement its reforms to the superannuation industry – My Super and Super Stream. The government will provide $44.5 million over four years to introduce My Super, a low-cost default superannuation product, and to facilitate the transition to Super Stream, which standardises how superannuation contributions are processed.

One announcement makes directors personally liable if a company fails to pay employee superannuation. The government proposes from 1 July, 2011, that the director (penalty regime) will now cover superannuation guarantee amounts.

Car deduction

Small businesses (generally, those with annual turnover of less than $2 million) will be able to claim a deduction for the first $5000 of the cost of any motor vehicle purchased from 1 July, 2012, for use in their business. The balance of the purchase price will be transferred into a depreciation pool and depreciated at 15 per cent in the first year and 30 per cent in later years.

Entrepreneurs tax offset

The Entrepreneurs Tax Offset will be abolished from 1 July, 2012.

Paid paternity scheme

A paid paternity leave scheme, which was due to commence on 1 July, 2012, has been deferred to 1 January, 2013. The scheme will provide eligible working fathers and other partners who are providing full-time care of a child, or sharing that care, with two weeks of leave paid at a rate equivalent to the national minimum wage.


All in all, the budget is a modest one for small business, with no great interest from the government in assisting the sector. Given the position of the economy, the government has missed an opportunity to give small business a shot in the arm.

anton duc is workplace relations manager for the baking industry association (nsW employers) and industrial relations advisor for the baking industry association of victoria. anton advises the baa on award modernisation and is also a practicing solicitor with a sydney law firm.

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