THE Institute of Public Accountants (IPA) is supportive of the Federal Government's JobMaker program, but is suggesting 'a few tweaks' could make it more effective.

"Overall, the Institute of Public Accountants is very supportive of the JobMaker measure as it is essential that Australia’s economy not only recovers but also expands through job creation,” IPA chief executive officer, Andrew Conway said.

Mr Conway said the IPA expressed some concerns over the JobMaker Hiring Credit and small business eligibility, in its submission to the Senate Economics Legislation Committee Inquiry into Economic Recovery Package (JobMaker Hiring Credit) Amendment Bill 2020 (provisions). 

“The JobMaker Hiring Credit Budget 2020-21 fact sheet indicates that employers who had no employees as at September 30, 2020, will not be eligible for the first employee hired but will be eligible for second and subsequent hires," he said. "This effectively means that a sole trader needs to employ two additional employees to qualify for one JobMaker hiring payment. 

“This could be a lost opportunity considering there are currently more that 1.2 million small business entities that are non-employing.  Just think of the numbers that could have been incentivised to employ for the first time but may not have the capacity to employ two staff.

“The fact that these payments are paid in arrears is also an issue, as it doesn’t help an entity with cash flow concerns.  Even though the proposal is for businesses to start employing from October 7, the earliest they will receive a JobMaker hiring payment will be after February 1, 2021.   This may be counterproductive for those small businesses which would otherwise hire new employees," Mr Conway said.

“We are pleased that the Australian Taxation Office (ATO) will administer the JobMaker Hiring credit. It has proven to be capable of administering JobKeeper, where it was able to put systems in place within a relatively short period of time which was a credit to its capability.

“Another concern is that an employer needs to be reporting through Single Touch Payroll (STP) in order to be eligible even though it is not mandatory for all employers to be STP compliant until June 30, 2021. We understand the ATO’s preference to deal with an employer who is STP compliant, however, this could preclude many smaller employers (1-4 employees) who are not currently required to be STP compliant. In comparison, JobKeeper did not favour employers using STP, and was more inclusive in its design," Mr Conway said.

“It is unclear as to whether employers who are on JobKeeper will be ineligible for JobMaker. Given that JobKeeper payments cease on March 28, 2021, the IPA believes that these employers should be permitted to transition to JobMaker after this date.  The continuity of payments would assist in the recovery effort and help to ensure their ongoing viability.

“The IPA’s view is that these features, especially when considered collectively, detract from the policy objective of incentivising employers to take on additional employees,” Mr Conway said.

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THE Institute of Public Accountants (IPA) has commended the Federal Budget's design to 'create jobs and get Australia moving again' but has repeated its call for the Federal Government to now "address the longer-term need for reform".

“The Federal Budget released last week is designed to reboot the economy which faces the bumpy road of a pandemic fuelled recovery,” IPA chief executive officer, Andrew Conway said.

“We all understand the level of debt that Australia now finds itself with but unfortunately, this is unavoidable if we are to get the country moving again. We need to get the doors of small business and the borders open again, create jobs and get the cash registers humming again, in order to recover and grow in a new ‘COVID-normal’ world.

“This Budget is regarded as being all about ‘jobs, jobs, jobs’.  However, it is important that we focus on ‘reform, reform, reform’; specifically, reform to taxation, reform to regulation and reform to workplace relations," Mr Conway said.

“The measures taken in this Budget such as JobMaker hiring credit, JobTrainer, enhanced and extended instant asset write-off, the second Women’s Economic Security Statement, Boosting Apprenticeships Wage Subsidy, the Digital Business Plan, additional R&D incentives, boosting mental health support, and insolvency reforms all point to important measures designed to provide structural support to small business. 

“Most of the tax measures are temporary in nature and while they will bring forward significant activity over a one to two year period, we will need the next series of structural reform measures to create the foundation needed for a longer term prosperity," he said.

“Budget announcements are the easier part of the solution which is an important element of the economic reboot. The hard part is still to come and that is structural reform which we acknowledge comes with political risk but is essential for sustainability and to reap the benefits of this early investment.

“Long term economic stability and prosperity will only come once we address the structural deficiencies of our tax system and in the broader economy and remove the regulatory burdens that form a wet blanket on small business survival and growth," Mr Conway said.

“It’s relatively easy to spend money which is necessary for the reboot versus structural reform which is hard work and will take courage to deliver.

“It is therefore essential that we pursue the holy grail of meaningful and holistic reform if we are to grow from this reboot phase to kicking the real goals the economy requires for a sustainable and prosperous future,” Mr Conway said.

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THE FEDERAL Government’s plan to bring back the loss carry back initiative is being welcomed by the Institute of Public Accountants (IPA), but it will not help the majority of small businesses, IPA’s analysis shows.

The offset rate increases are welcomed but the cap of $1,000 is inadequate, IPA chief executive officer, Andrew Conway said.

“While we fully support the loss carry back scheme and continue to advocate for it to be a permanent fixture of our tax system, it does not help unincorporated small businesses,” Mr Conway said.

“The majority of small businesses are unincorporated entities, and therefore this policy will not directly benefit the army of entrepreneurs struggling to survive in a post COVID world.

“Increasing the unincorporated tax discount would be a better option to incentivise most of the unincorporated small businesses around the country to take a risk, grow their business and employ workers.

“While this group will enjoy any brought forward stage two or stage three tax cuts, this initiative directly rewards individuals who take on the arduous challenge to run a small business. 

“The small business income tax offset (also known as the unincorporated small business tax discount) can reduce the tax a business pays by up to $1,000 each year. Only taxpayers carrying on a small business as a sole trader or have a share of net small business income from a partnership or trust are eligible.

“The rate of the offset was 8 percent up to the end of the 2019-20 income year but will increase to 13 percent for 2020-21 and again increase to 16 percent for 2021-22 and then remain at that level,” Mr Conway said.

“While we are pleased that the small business tax offset rate is increasing, it is still capped at $1,000 which means that most small businesses will achieve their offset faster, rather than enjoy any more benefit as the rate increases.

“To incentivise small business to employ people, we are calling for the rate and threshold increases to be tied to small businesses which employ people,” he said.

“Over 60 percent of small businesses are non-employing and in the current environment the government needs to encourage all businesses, both small and big, to do their bit to soak up the pool of unemployed,” Mr Conway said.

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THE nation’s peak accounting and bookkeeping bodies have joined forces with the Australian Small Business and Family Enterprise Ombudsman Kate Carnell to make a united call for a Small Business Viability Review program to be included in the Federal Budget.

CPA Australia, Chartered Accountants Australia and New Zealand (CAANZ), Institute of Public Accountants (IPA), Institute of Certified Bookkeepers (ICB), Council of Small Business Australia (COSBOA) and the Ombudsman are calling for a government funded subsidy to ensure small businesses can access urgently needed professional advice on their viability. 

Under the jointly proposed Small Business Viability Review program, small businesses with up to $10 million in annual turnover would be eligible to obtain a subsidy valued up to $5,000 to access a tailored 15-month plan from an accredited professional on how and whether to turn around their business or exit.

“Small businesses have endured the toughest trading conditions we’ve seen in living memory over the past few months and the sad reality is that not all of them will survive,” Ms Carnell said.

“As of today, there are many Australian small businesses that are no longer eligible for JobKeeper, however they may still be experiencing a significant reduction in turnover of anything up to 29 percent.

“Those businesses that aren’t getting JobKeeper will also no longer be eligible for rent holidays or reductions as JobKeeper eligibility is part of the criteria for commercial rent relief negotiations.

“With banks also seeking repayment plans from their small business loan holders, there is a snowball effect that could place many otherwise viable small businesses under significant financial distress," Ms Carnell said.

“Small businesses need access to an accredited professional adviser such as an accountant or bookkeeper to judge the viability of the business now. This is the critical first step that the small business owner needs to take so they can make an informed decision about the future of their business.

“Our modelling suggests 500,000 Australian small businesses would take up the viability subsidy at a budget expense of approximately $1.5 billion."

CPA Australia CEO Andrew Hunter said providing financial support to businesses to access advice would benefit businesses, their staff and the economy.

“Access to professional advice is essential to enable businesses to manage through a crisis, adapt to the new environment and aid in their recovery,” Mr Hunter said.

“This process takes time and requires support. The risks of failure are likely to be higher for businesses that are unable to pay for professional advice.”

Chartered Accountants Australia and New Zealand CEO Ainslie van Onselen said small businesses under financial strain may not be able to afford much-needed professional advice in the midst of a pandemic-induced recession.

“Small businesses have a short window to revitalise their operations and professional advisers play a key role in determining the best course of action,” Ms van Onselen said.

“Tight cash flow, compounded by other business costs, could make professional advice unaffordable and that would imperil their future.”

Institute of Public Accountants CEO Andrew Conway said access to professional advice goes to the heart of businesses managing through the crisis, to business recovery and adapting to the changing environment.

“The government’s recently announced plans to overhaul insolvency laws to give small businesses a chance to trade through the coming months is welcome,” Mr Conway said.

“It’s now vital the government supports these small businesses to get the tailored advice they need to plan ahead.”

Institute of Certified Bookkeepers executive chairman Matthew Addison said it was vital small businesses get advice from a trusted source, such as their accredited bookkeeper.

“Bookkeepers have been working hard to assist their small business clients over the past few months,” Mr Addison said.

“Government support for small businesses now will assist them to make a wise decision about their future.”

COSBOA CEO Peter Strong said the COVID crisis, which has come on the back of devastating natural disasters, has driven many small businesses to the brink.

“Deloitte Access Economics modelling estimates about 240,000 small businesses are at risk of failure and that highlights the need for small businesses to sit down with their trusted adviser for a viability assessment,” Mr Strong said.

“We know that many small businesses are under enormous financial pressure as a result of this crisis and the sooner they act on their professional advice the better the outcome for everyone involved.”

www.asbfeo.gov.au

www.cpaaustralia.com.au

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www.icb.org.au

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