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The "in a nutshell" Policy summary

Written on the 1 July 2016 by Franchise Council of Australia


The key Election Campaign Policy announcements In a nutshell ...

Coalition Government "Backing Small Business" policy extract:

The Coalition's policy is framed in terms of driving jobs growth, and draws from the 2015/16 Budget initiatives including:

  • A 1.5 percentage point tax cut for incorporated small businesses with a turnover of less than $2 million per year;
  • A 5% tax discount for unincorporated small businesses;
  • Immediate tax deductions for each and every asset purchased up to $20,000; and
  • Immediate deductibility of professional expenses when establishing new small businesses.

The Turnbull Government is promoting it's Ten Year Enterprise Tax Plan which it says "will support growth, higher wages and jobs by lowering the tax rate for companies over time to an internationally competitive level", and includes pledges to:

  • Cut the small business company tax rate to 27.5 per cent for small businesses with a turnover less than $10 million.
  • Increase the unincorporated tax discount from 5 per cent to 8 per cent, capped at $1,000 for small businesses with a turnover less than $5 million.
  • Extend access to the instant asset write off so that small businesses with a turnover less than $10 million can instantly deduct each and every asset under $20,000.
  • Make life easier by simplifying Business Activity Statements (BAS), reducing reporting labels from seven to three.

The company tax rate will be progressively lowered to 25 per cent by 2026-27 for all companies.

The Coalition is also promising to fix Australia's competition laws to help small to medium companies compete with larger established ones and to ensure they're not shut out of markets unfairly by the big players. It states that "adopting the recommendations of the Harper Review ... will prevent the misuse of market power and benefit small businesses. It will enhance competition, support innovation, benefit consumers and boost jobs and growth".

The Coalition policy to "Support Innovative New Businesses and Jobs" highlights tax incentives to attract more venture capital investment in Australia, helping to increase the funding available to startup businesses. It states that "we are establishing international landing pads to assist Australian startups expand into key global markets" by investing $23 million to:

  • increase the number of startup incubators and accelerators in Australia
  • support the expansion of existing high-performing incubators and accelerators
  • attract 'experts in residence' to provide specialist advice to startup businesses

The Coalition's 'plan to develop Indigenous business opportunities' promises to continue to build jobs and growth in new Indigenous business by establishing a $115 million Indigenous Entrepreneurs package supported by a three per cent of Government procurement commitment and Employment Parity Initiative

Labor Tax Reform, Startup Support and Access to Justice policy summary:

Key policies of relevance to the franchise sector are included in Labor's tax reform package.
Labor states that it "will reform negative gearing and the capital gains tax discount to ensure that our tax system is fair, sustainable and targets jobs and growth".

These include:

  • tax cuts for small business with a turnover of less than $2 million per year and continuing commitment to cut the tax rate for small business to 25 per cent over time
  • all negative gearing to only be available for one asset class (new housing from 1 July 2017). Prior investments to be fully grandfathered
  • Negative gearing losses for other assets from 1 July 2017 to be quarantined and can be carried forward and offset against other investment income or the final capital gain on the disposal of the investment
  • CGT discount for all assets purchased after 1 July 2017 to be halved (i.e. from 50% down to 25%). All investments prior to this date will be grandfathered
  • CGT discount unchanged for superannuation funds and for small business assets however  clarification is required for assets that may fall outside the 'active asset' definition and rules

The policy states that "Labor will consult with industry, relevant stakeholders and State governments on further design and implementation details ahead of the start date for both these proposals".

Other Labor policies of relevance to the franchise sector include "Getting Australia Started" which focuses on supporting new enterprises in the tech sector to contribute to jobs growth and "Access to Justice for small business"  outlining measures to address a number of disincentives to bringing private litigation under the Competition and Consumer Act.

Specific promises include:

  • Establish a National Coding in Schools centre (NCIS)  and provide every child the opportunity to learn coding and computational thinking in school;
  • Provide 100,000 STEM Award Degrees 20,000 a year for five years which will provide a financial incentive for students to enrol in and complete a STEM undergraduate degree with recipients having their HECS debt written off upon graduation;
  • The $500 million Smart Investment Fund will partner with VCs and licensed fund managers to co-invest in early stage companies, providing a Commonwealth investment of up to 50 per cent of the startup capital needed to help Australian companies commercialise innovations;
  • Work with industry on StartUp Finance, a partial guarantee scheme to improve access to finance to micro-businesses.
  • Allowing judges in Federal Court to waive liability of adverse costs, private litigants under Part IV of the Competition and Consumer Act will be empowered to bring litigation without the crushing burden of enormous legal fees; and
  • fund the Small Business Ombudsman to provide an initial assessment on whether a private litigant is likely to be granted a no adverse cost order.

The Greens - "Level the Playing Field Standing Up for Small Business" policy summary:

The Greens have pledged to:

  • continue to work in the Parliament to secure the Effects Test for fairer business competition
  • allocate $815.9 million over four years to restore loss- carry-back provisions that enable small businesses to manage 'lumpy' cash flows
  • increase the small business entity turnover threshold from an annual turnover of no more than $2 million per annum, to an annual turnover of no more than $10 million per annum
  • support the $20 000 instant asset write- off
  • increase the threshold for GST registration to $150,000 or more for businesses, and to $300,000 or more for not-for-profits to reduce administrative burdens
  • free up small businesses from the administrative burdens of being a superannuation intermediary, by having employee super collected with tax as a pay as you go contribution, to be distributed by the Australian Tax Office
  • protect hire equipment from receivership acquisitions
  • extend the Do Not Call Register to business telephone numbers
  • allocate $20 million to implementing programs for small business owners and staff to ensure their mental health is being looked after, because we know that running a small business is stressful.

Labor will introduce two new visa categories that will help attract the best global entrepreneurial talent to help build Australia's growing startup ecosystem.

While not specifically highlighted in the Greens Policy principles, in October 2015, the Green's introduced a bill into Parliament that would make head offices accountable for the wages and conditions of their franchisee's employees, following the worker underpayment issues at 7-Eleven.  The Greens called for the government and Labor to support its bill again in May 2016.

The Nick Xenophon Team (NXT)

The NXT has published 'policy principles' rather than announce specific policy commitments.  NXT has provided "examples of what needs to be done", citing:

  • Targeted tax breaks for the first two years of operation
  • Payroll tax exemption for businesses with up to 15 full-time equivalent employees
  • Streamline access to and processing of Government services for small business

Senator Xenophon has been vocal in his support for strengthening competition laws.


Author: Franchise Council of Australia

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