The Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, has released a comprehensive plan, proposing a number of structural changes to improve the legal, regulatory and compliance environment for small businesses.
The plan, pitched to the Morrison government, is divided into six sections, each covering a vital area of doing business in post-COVID-19 times.
Among Ms Carnell’s headline recommendations is the abolishing of fringe benefits tax for small business, the creation of a federal small business claims tribunal, and the enactment of a permanent small business instant asset tax write-off of $150k.
Also in the plan is the introduction of a small business award and 30-day payment terms for small business, as well as the creation of a small business procurement panel for any government contract under $10 million.
The ombudsman warned that without these changes, the consequences will be dire for the Australian small business community.
“Small businesses have never done it tougher,” Ms Carnell said.
“The devastating bushfire season has been overshadowed by the impact of the COVID-19 crisis.
“A collapse in local employment, tourism and events industries and the flow of goods and services around our country has led to economic conditions we’ve never seen before.”
She explained that small businesses are currently burdened with their survival prospects and are asking themselves if it is worth continuing in business at all.
“Our recovery plan aims to restart the economy by getting people back to work and building economic confidence. Small business is the cornerstone of economic activity — employing over 5 million Australians.
“Our recommendations cover a broad range of areas including taxation, access to justice, industrial relations and government procurement.”
New small business award
One of these areas — industrial relations — could prove to be particularly interesting, with the ASBFEO proposing the introduction of a small business award, with a single minimum hourly rate for all workers, irrespective of duties.
According to her report, the award would sit above the existing industrial relations system and would include the provision for “permaflexi” staff who are employed on a permanent basis but with flexible hours each week.
Ms Carnell explained that it would work on a “better off on average test”, where the test will consider the average earnings for an employee over the previous 12 months.
Outside the new small business award, the ASFEO is also asking for legislation to permit employees to easily move between awards and classifications without negative outcomes for the small business employer.
Furthermore, the ASBFEO is asking Mr Morrison to introduce a government HECS-style limited recourse facility to allow for the phase-out of JobKeeper payments.
According to Ms Carnell’s proposal, the facility would be capped at a certain amount depending on the size and capacity of the company, while repayments would only be required once turnover has reached a set level.
The loan amount could be indexed each 12 months at the same rate as the Consumer Price Index, Ms Carnell said, and similar to HECS, any loan amount would not be considered a debt to be taken into account by lenders.
Moreover, the ATO is being asked to scale back its “unnecessary” regulation of the sector.
According to Ms Carnell’s suggestions, the Tax Office should:
- Replace depreciation schedules with a permanent instant asset tax write-off for small business of $150,000, indexed annually and reviewed every three years.
- Allow small businesses to make a single payment to the ATO to cover PAYG(W), superannuation guarantee and GST payments in line with their Single Touch Payroll reporting, with the ATO distributing superannuation to the relevant funds.
- Reduce the period of review for small business tax returns to one year following lodgement.
- Remove fringe benefits tax from small business.
Recognising that trade-offs will need to be made, Ms Carnell opined that seeking small business to drive a recovery to “our former way of life” must be balanced by supporting them to achieve.
“Ultimately, our COVID-19 Recovery Plan provides the framework to build essential support for Australia’s small businesses and family enterprises and a future that all Australians can be proud of,” the ASBFEO said.