Budget incentives for small businesses to spend on technology and training need to be legislated by the next government so that the scheme can get properly underway, said Tony Greco of the IPA.
The initiatives, which offer 120 per cent deductions for investments in skills and digital uptake, became available from budget night, but there was insufficient detail to change small-business behaviour, he said.
“Normally, if something was effective from budget night we would see the bill appear the very next day and with the bill an explanatory memorandum, which gives us a lot of information on how the eligibility rules will be structured,” Mr Greco said.
“Then the ATO would develop its own guidance. So we would have a fair amount of information regarding eligibility in particular. These are temporary measures, so we are learning new rules.
“All we have is a couple of paragraphs in the budget papers and the election could be called anytime soon, then Treasury goes into caretaker mode.”
The Labor Party had since supported the idea, but Parliament did not sit again until August, he said.
Mr Greco, who was speaking on an Accountants Daily podcast that becomes available on Friday afternoon (8 April), was optimistic that guidance would follow soon after.
“We would hope that once a new government is in place the Treasury would have done some consultation around the eligibility rules,” Mr Greco said.
“But that still doesn’t help with dealing with the uncertainty right at this moment.”
He said accountants and advisers were feeling the pressure of questions that were simply unanswerable.
“If you look at the skills and training … does offsite training with an external facilitator – is that in? We can’t answer that. Do you have to be a registered training organisation? We’re not sure,” Mr Greco said.
“Self-employed or contractors – sometimes they are very significant contributors to a business – does it apply to them?
“It does say ‘employees’ but we know employees for the super guarantee you include contractors, so all those sorts of questions are front of mind.”
He said the two incentives went hand in hand, with training a necessary complement to digital adoption, but there were too many unknowns there as well.
“There were three categories in the Budget papers: portable payment devices, cybersecurity, and subscriptions to cloud-based services. The title says ‘digital adoption’ … now one could assume that might be extra spend in those areas – we just don’t know,” Mr Greco said.
“It’s a key question that’s being asked right at this moment, and we can’t ascertain whether you’ll get it on an existing spend, like if you’ve got a subscription to Xero – or do you have to spend more on other things?”
Beyond what qualified for the incentives, there were issues about how it interacted with other tax initiatives, such as full expensing.
One certainty, he said, centred on when the extra deduction would be a tax benefit with spending between budget night and 30 June rolling into the following financial year.
He said advising businesses on whether to spend had to return to basics.
“Are you chasing the deduction? Or is it a good business decision? No one should really spend $1 to get an extra 20 per cent. I think business people know it, but it does change behaviours. It's no secret that people are more attracted to spend when they know there’s an extra deduction,” Mr Greco said.
The Accountants Daily podcast featuring Tony Greco will be available Friday afternoon (8 April) at accountantsdaily.com.au
Philip King is editor of Accountants Daily and SMSF Adviser, the leading sources of news, insight, and educational content for professionals in the accounting and SMSF sectors.
Philip joined the titles in March 2022 and brings extensive experience from a variety of roles at The Australian national broadsheet daily, most recently as motoring editor. His background also takes in spells on diverse consumer and trade magazines.