5 Initiatives that SME's can Benefit Significantly from the 2014 Budget

Relevant Budget Programmes can be shown in detail at
http://www.budget.gov.au/2014-15/content/bp2/html/bp2_expense-16.htm

• Continuation of EMDG

The Government will provide an extra $50m per annum to the EMDG Scheme.

• Continuation of R&D Tax Incentive

The Government will continue with the R&D Tax Incentive Scheme reducing the entitlement by 1.5% to 43.5% (still significant benefits for Innovative companies)

• Entrepreneurs' Infrastructure Programme — establishment

The Government will replace $845 million suboptimal programmes (such as Commercialisation Australia and IIF Funds  with  $484.2 million over five years to establish the Entrepreneurs' Infrastructure Programme to implement its new approach to industry policy.
The programme will focus on supporting the commercialisation of good ideas, job creation and lifting the capability of small business, the provision of market and industry information, and the facilitation of access to business management advice and skills from experienced private sector providers and researchers.
The programme will be delivered through a single agency model by the Department of Industry to achieve efficiencies and reduce red tape.

• Industry Skills Fund — establishment

$476.0 million over four years to establish the Industry Skills Fund (ISF) from 1 January 2015 to support the training needs of small to medium enterprises which cannot be readily met by the national training system. Industries targeted will include: health and biomedical products; mining, oil and gas equipment technology and services; and advanced manufacturing, including defence and aerospace.
The ISF is expected to deliver 121,500 training places (providing participants with qualifications, skill sets and recognition of both prior learning and current competencies) and 74,300 support services (including mentoring and foundation skills) over four years. Businesses will be required to make co contributions towards the cost of training on a sliding scale depending on the size of the enterprise.

• Community Business Partnership —

re establishmentThe $6.0 million over four years to re establish the Community Business Partnership to advise the Government on philanthropy in Australia. The Community Business Partnership, to be chaired by the Prime Minister, will bring together prominent business and community leaders to provide leadership and high level advice for encouraging growth in volunteering and philanthropy and promote partnerships between business and community organisations.
Further information can be found in the Coalition's Plan to Encourage Great Philanthropy and Strengthen Australia's Charities and Community Groups

(referron programme in conjunction with mission Australia)

Craig James - the Australian economy - where 2 now?

Craig James – CBA Commsec's Economist Presented at the CBA Innovation Forum for SME’s on Monday 17 June 2013. A passionate speaker, with a sense of humour!  

The state of play 

• Business is currently quiet, and people are waiting for the election.
• Why the wait ?– the reality is that the government is run by bureaucrat’s, and  financial decisions (interest rates etc) by the reserve bank.
• Massive growth going to come from India and China – we are well placed. 
• Its not all about mining… services, education, tourism, health and infrastructure will continue to drive the economy.

Why are we glum?

•  Election
•  Bad perceived Political Leadership
• We are going through “stuff”  - changing from internet and mobile – changing way we shop – retailers are changing the way we are buying
•  High $ and Australia being expensive compared to rest of world – people are going overseas on holidays – tourism has been suffering
• People have not been lending/ borrowing as much – banking will possibly not be as profitable as in the past

In Australia we are doing ok

We are one of 11 countries with a AAA rating

5.5% unemployment

2.5% inflation

State of our State Economies

Strength of states compared by 8 indicators including retail/infrastructure/ Mining/agriculture

• Mining - WA/NT - growth
• Manufacturing/Finance/ Services - ACT NSW Vic - maintaining
• Agriculture – SA and Tasmania – going backwards 

What about NSW?

• NSW growing faster than in past 12 years
• Unemployment different in different parts
• Inner West 3.5
• Northwest 6%
• Centrals West 6%

Asset Classes in Australia

Property

Home process are doing ok. Sydney  and WA increasing by 4% against an average of 2%

Sharemarket

• Volume deceasing
• USA growing
• A$ profits increasing
•  Returns matter
•  Fully franked dividends – bode well for increase in shareemarket
• People and funds are sitting on a lot of cash , waiting for things to stabilize
• Interest rates low
• A$ - now 95c - expected to go to 85c

Forecast

• Aussie economy positioned well for growth on a number of levels
•  Confidence in economy will change from negative to positive (perception)
•  Agriculture – prime position to take place with
•  Growth will come from building our infrastructure
•  Increase in Services – growth of tourism and services – with a view to increased exports
• Growth of China and India – (on our doorstep) see Hans Rosling’s video on (a brilliant video of the rise of China and India). http://bsivc.blogspot.com.au/2013/06/hans-rowling-rise-of-india-and-chinas.html
• USA is coming off low base of the GFC – Ben Bernancke looking to stop the growth – will possibly increase interest rates, USA$ will increase –

The Numbers

Economy                  2- 3%

Inflation                    2- 3%

Unemployment         5- 6%

Res Property             2- 3%

Sharemarket              5,200

A$                             92 – 95c

Once the election is out of the road – nothing will be holding us back….. bottom line – we are bullish!!

2013/14 Australian Federal Budget - how it affects me!

Last night the Budget delivered no real surprises after the majority of the proposed changes had been drip fed to the market in previous months.

Wayne Swan blamed a stubbornly high Australian dollar and lower commodity prices for a dramatic fall of some $17 billion in forecasted tax receipts, leading to an estimated budget deficit for 2012/13 of $18 billion... and that was why there wasn’t the $1.5b surplus promised....

He knew there was a high dollar and lower commodity prices a year ago.... why did he not make appropriate changes then? Or tell us then that there would not be a surplus then ? what a joke!!! I hate surprises!!
If I gave this excuse to my board... I would be fired on the spot!

What was the price of iron-ore  when he took over the reins  from Costello and what are they now? Costello had a surplus when Swan took over!

Key takeouts relevant to me


From a financial planning perspective

Great Article from our team at Ark total Wealth please feel free to contact them by clicking on their link
From a Financial Planning perspective, there have been a few changes in relation to superannaution and taxation which may have an impact on your personal situation. We have provided a brief summary on some fo the key changes.

• Superannuation

Cap on Tax Free Earnings - At the moment, any income in the pension phase is tax free. From the 1st of July 2014, the tax free portion will be capped at $100,000 per individual. Any earnings above this will incur a 15% tax. There is no change to the taxation of lump sum withdrawals, these will still be tax free.
There is however an exemption around the capital gains tax as this could cause many funds to exceed the $100,000 cap. For assets purchased prior to the 5th of April 2013, until the 1st of July 2024 the old tax system will apply (no tax in pension phase). This gives you ten years to structure your assets within the superannuation environment.

Refund of Excess Contributions - Current excess contributions are taxed at 46.5%. Excess contributions will now be taxed at your marginal tax rate as opposed to the 46.5%. In addition, excess contributions can be withdrawn from the fund.

Higher Concessional Caps - If you are aged over 60, from the 1st of July 2013 your concessional cap will increase from $25,000 to $35,000. From the 1st of July 2014, this will apply to anyone aged 50 and over. These amounts will be indexed.
Additional 15% tax for high income earners on concessional contributions - For those that earn more than $300,000, an additional 15% tax will be applied to concessional contributions. These contributions include superannuation guarantee and salary sacrifice Contributions. If you earn more than $300,000, you need to review your super contributions.

• Taxation/Cash Flow/Social Security

Cap on Self Education Expenses - There will be a cap of $2,000 on self education expenses that can be claimed in a Financial Year.

Replacement of Baby Bonus - This change has attracted the most attention. Essentially the baby bonus will be replaced by the Family Tax Benefit A.

Increase of 0.5% in Medicare Levy - Another of the well documented changes. The increase in the Medicare levy will be used to help fund DisabilityCare Australia.(.05% on 100k taxable income is $500 - well worth it to support disabled kids and education!!) 

Ending of discount of early repayment of HECS/HELP debt - From the 1st of January, there will be no discount for up-front and voluntary payments of HECS and HELP debt

Given the uncertainty around which changes will be implemented, it is very much a wait and see approach for everyone. If you have any questions, please don't hesitate to contact on of our Advisors.



From an Innovation Perspective 

Research and development

More timely R&D credits for smaller business

Quarterly payments of the 45% refundable tax offset from 1 January 2014for companies having a turnover of less than $20 million. This measure is designed to provide a cash flow benefit to SME’s as they will not need to wait until lodgement of their income tax return for their refundable R&D tax offset. There are a number of tests in the draft legislation that potentially make it difficult for those companies, at which the assistance is targeted, to actually qualify for the payments. BSI have made submissions to treasury in this regard.

Denying Companies with turnover of $20b or more to access R&D Incentives encouraging R&D for conglomerates to go offshore!

This measure was announced in February and and is expected to affect 20 corporate groups including large banks, miners, refiners, retailers and telcos. Whilst the budgeted savings may be significant ($1.1 billion over the forward estimates), the potential cost to the economy from these corporates potentially shifting R&D activities and other operations offshore could be massive!

Speak to one of our R&D Gurus to see how they can help you maximise your incentives