The Government’s tax relief for small business announced today is more of a welcome reminder that the they have not been forgotten than cash flow relief - leaving many asking “please sir, can I have some more?”

The relief package announced today would deliver cash flow relief through a 20% discount in the December quarter PAYG instalment for small businesses with a turnover under $2 million.

But here is why small business needs more:

It’s worth an average of $586 per business
On the Government’s estimate that the relief measure will provide a $440 million cash flow boost for SMEs, and allowing for around 750,000 small businesses with a turnover of less than $2 million this equates to an average $586 per business. In practice, it will not work out this simply. For some the relief will be more substantial. For others there will be no relief. Where relief is provided it will flow through over the January/February period where cash flow is traditionally at its tightest for SMEs.

You can already vary your PAYG (this just makes it automatic)
SMEs have always had the ability to vary their PAYG instalment and this can be done in any quarter. Where a small business believes that their instalment tax is excessive, they can reduce it by making an application in their quarterly BAS. This relief announcement simply creates an automatic reduction.

The strongest SME employers are left out
The Government will need to focus on the needs of the SME community as the financial crunch flows through into small business through 2009. As one of the largest employer sectors in the market, Australia cannot afford to have the SME sector under severe stress. In many cases they are paying the price for the excesses and poor decisions of the big end of town. Most SMEs have their personal assets on the line. If it doesn’t work out, there is no termination pay out for them – they are more likely to lose their home.

Providing a stimulus package for all small businesses will not only assist them, it will keep them employing. SMEs have been left out in the cold for too long. The Government needs to continue with its initiatives to assist small business and they need to be broadened to include all SMEs with turnover up to $5 million. Many of these are significant employers and there is nothing provided for them.

More information
Click here to read the Government media release