Small businesses are the big winners from the Federal Budget with a series of measures designed to boost cash flows, stimulate investment and cut red tape.

Business SA chief executive Nigel McBride welcomed the Budget’s very clear focus on helping small business including new start-up businesses.

“The Budget will give small business the ‘kick start’ they need to grow, invest and create sustainable jobs,” McBride said.

“Clearly the Government has heard the message from the Chamber movement that ‘small business is too big to ignore’.

“It is small business that can grow the economy as we recalibrate from the mining investment ‘boom’ and, with it, create new jobs.”

Taxation reductions for small business with annual turnovers of less than $2 million are at the heart of the $5.5 billion small business package. Companies will enjoy a 1.5 per cent tax break, taking the effective tax rate to 28.5 per cent, from 1 July 2015, while unincorporated enterprises will receive a tax discount of 5 per cent to a limit of $1000 per year.

Accelerated depreciation has also been enhanced with small businesses able to immediately write off the cost of new assets up to a total of $20,000 from now until 30 June 2017.

Changes to the fringe benefits tax for businesses under the $2 million annual turnover threshold will see employers able to offer the employees more than one work-related portable device, including mobile phones, tablets and laptops, from April 2016.

The Government has also refocussed its job creation incentives with $18.3 million allocated over five years to allow job seekers to undertake up to 25 hours per week of unpaid work experience, for up to four weeks, where there is the likelihood of employment as a result.

The Government has also rationalised its wage subsidy regime, consolidating four existing programs into a single wage subsidy pool to operate from 1July 2015. The Restart program, aimed at encouraging mature individuals back into the workforce, has been made more flexible with employers able to access fund over 12 months replacing the previous two year criterion.

Along with a $5 billion concessional loan facility to develop infrastructure in northern Australia, the small business incentives comprised the major business spending, or revenue foregone, elements of the Budget.

While many of the Budget’s key initiatives were well-flagged ahead of the Budget, there were some surprises in the detail. One involved a change to the way in which taxpayers will account for work-related car expense deductions from 2015-16. Two previous calculation methods have been dropped and only one deduction rate, 66 cents per kilometre, will to apply to all vehicles. The new methodology will raise $845 million for the Government over three years.

The Budget was framed against a backdrop of a 2014-15 budget deficit of $41.1 billion, down from $48.5 billion in 2013-14, with the deficit forecast to decline to $35.1 billion in 2015-16. Real GDP growth is forecast to increase from 2.75 per cent in 2015-16 and to 3.25 per cent in 2016-17.

While there is a significant encouragement for small business, some commentators are concerned that the Budget was more of a political document than an economic and fiscal blueprint to repair the nation’s finances and put the country on a long-term jobs growth trajectory.

With many of the 2014-15 Budget measures stalled in the Senate, Business SA’s Nigel McBride called for greater bipartisan support in response to the latest Budget.

“Getting the Budget back to surplus is important and the Budget predicts steadily decreasing deficits, but a Budget deficit in excess of $35 billion is still concerning and there is scope for a more rapid improvement,” McBride said.

“However, the nation and, in particular the small business sector, cannot afford a repeat of the paralysis that has gripped the economy since Budget night last year,” he said.

Business SA’s full analysis of the Budget and effect on business can be found here.