21/05/2009 - 00:00

Small business backs budgets

21/05/2009 - 00:00

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THERE weren't too many winners to emerge from the gloomy economic backdrop surrounding last week's federal and state budgets, but the small business sector has more to be pleased about than most.

THERE weren't too many winners to emerge from the gloomy economic backdrop surrounding last week's federal and state budgets, but the small business sector has more to be pleased about than most.

The federal government allocated more than $500 million in small business support, including $65 million in research and development tax credits, as well as a sharp increase of the bonus tax deduction on new equipment for small and medium-sized enterprises (SMEs) turning over less than $2 million.

The Rudd government will also establish a new $196 million Commercialisation Institute and has allocated an extra $50 million to help export-orientated businesses.

The state government announced a suite of measures to support SMEs, including a $155 million jobs protection package designed to support employers of apprentices and trainees, the unemployed and the tourism industry.

Following the Barnett government budget, SMEs with payrolls between $1.6 million and $3.2 million will be eligible to receive a partial one-off payroll tax rebate. Employers with payrolls up to $1.6 million will be paid a one-off rebate up to $46,750 to fully offset their 2009-10 payroll tax liabilities.

Fremantle Coastal Business Centre chief executive Phil Kemp welcomed both budgets, acknowledging the R&D tax credit as "good nation-building stuff".

However, Mr Kemp called for payroll tax to be abolished altogether, describing it as a tax on entrepreneurship.

"Most people view it as a tax on employees but it has a far greater impact than that because small business owners won't expand their business, or take that extra contract, or they won't innovate if they go over the threshold by that one extra employee that forces them to pay payroll tax," he said.

Chamber of Commerce and Industry WA chief executive James Pearson agreed, saying while the WA budget recognised small business as the lifeblood of the local economy, payroll tax was an unnecessary burden on jobs.

Small Business Development Corporation managing director Stephen Moir said the tax relief initiatives would be a great boost for SME operators in WA.

"In the latest Ready Response Network survey undertaken by the SBDC in March, small business operators ranked tax breaks for small business as being the government initiative that would have the most positive impact on business," Mr Moir said.

SBDC estimates that about 33 per cent of employers registered for payroll tax will receive the full rebate, while a further 20 per cent should be eligible for a partial rebate.

"This means around 6,700 small businesses will be eligible for the payroll tax rebate, fully offsetting payroll tax for around 68,000 employees," Mr Moir said.

The Council of Small Business of Australia chief executive, Jaye Radisich, applauded both budgets, saying the R&D tax credit was a major support boost for SMEs by offering up to twice the value of the R&D tax concession currently available.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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