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.


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.”




THE Australian Small Business and Family Enterprise Ombudsman Kate Carnell said an overhaul of lending laws proposed by the Federal Government would offer a necessary funding injection to the small business sector.

Under the plan announced today by Treasurer Josh Frydenberg, lending laws will be changed to lift onerous barriers to small businesses applying for loans.

“Access to finance is critical to small business survival, particularly as support measures are tapered over the coming months,” Ms Carnell said..

“The reforms outlined today would give small businesses the confidence they need to seek funding to get through this crisis, so they can grow and employ. 

“Since the Banking Royal Commission, small businesses have faced an uphill battle to secure a loan, due to unrealistic serviceability requirements from the banks.

“The pendulum has swung too far and now is the time to correct this imbalance which is harmful to small businesses.   

“Even in the best of times, many small businesses struggle to secure finance, with a recent Sensis report revealing that of the dwindling number of small businesses that applied for a loan in the three months to August, about one in four had been knocked back. There’s a good chance the onerous small business loan application and bank assessment process is partly to blame. 

“We are aware of small businesses that have been asked for all sorts of documentation by the banks - even for loans that have been 50 percent guaranteed by the Federal Government – including director guarantees, which really means the family home. It’s no wonder small business owners are reluctant to borrow," Ms Carnell said.

“Importantly the banks will still be accountable to ASIC and the Government has pledged greater protections for vulnerable borrowers.

“ASIC will also have the power to impose penalties for prohibited or excessive fees and interest charges.

“Small business borrowers should always ensure their lender is an AFCA member and to go their trusted accredited financial adviser before taking out a loan.”

By Leon Gettler >>

AUSTRALIA’s recession and double digit unemployment seems ripe territory for Grameen bank, the microfinance and community development founded in Bangladesh which provides small loans (known as microcredit or ‘grameencredit’) to the impoverished without requiring collateral.

Adam Mooney, the CEO of Grameen Australia, said the bank was committed to boosting employment through supporting people on low incomes to set up their own small businesses in Australia’s post-COVID future, with a particular focus on women, migrant groups and the Indigenous community.

He said Grameen Australia was bringing a successful model that has worked all across the world to reach over 300 million people, particularly women, to start their own micro-enterprises. 

It is a model that has not only worked in Bangladesh and the Philippines but also in developed economies like the United States.

He said COVID-19 was the perfect opportunity for Grameen to expand into Australia.

“As we see national income support mechanisms like JobKeeper and JobSeeker tapering off, we’re coming into the market at a time to be able to make sure that we’re seeing this incentive to work that the government is so keen on, that we’re also keen on, providing opportunity to work,” Mr Mooney told Talking Business.


Grameen is pitched at micro-enterprises in communities, particularly people working from home. The bank gets invited into communities and targets women and men, forming groups of five or six, to develop their own business idea and get a small loan from Grameen and also receive mentoring and training.

Grameen will approach communities and find two-to-five female leaders that want to form a group.

The Grameen model is unique because it does not take any physical collateral but encourages ‘social collateral’ where the group members feel an allegiance to each other. The group will then present the idea with cash flow analysis, marketing analysis and risk analysis and logistics capabilities and Grameen will look at what working capital and fixed capital they need. For example, they may need loans for weaving looms or sewing machines, and then Grameen provides them with small loans of $5000-$10,000 with payments to start when the income begins to come in.


Groups are encouraged by Grameen to come together to share their experience and expertise.

“This is really the best of community led, strength-based economic development and this is what we’re all yearning for in the world right now,” Mr Mooney said.

He said the response around the world had been overwhelmingly positive.

“What we’re seeing all around the world, particularly in the states, is a 99 percent repayment rate for these loans being advanced, but more importantly, we’re seeing a transformation of confidence, of dignity, of control and economic security,” he said.


Mr Mooney said the approach of building communities really lends itself to Indigenous culture and migrant communities where there is strong loyalty and an attachment to clan.

It also has the potential to create social enterprises where communities create businesses that put their surpluses back into the community and bring business into the community.

He said in the last month Grameen had been approached by large banks, insurance companies, professional services firms and philanthropic investors. It is also talking to the Federal and State Governments about grants.

It is also looking at setting up pilot programs in places like Broadmeadows, Footscray and Wyndham in Victoria, and areas like Fairfield in New South Wales, along with communities in Queensland and the Northern Territory.

Mr Mooney said COVID-19 had been an accelerator for Grameen banking services in Australia.

Hear the complete interview and catch up with other topical business news on Leon Gettler’s Talking Business podcast, released every Friday at  


THE Australian Small Business and Family Enterprise Ombudsman, Kate Carnell said small businesses would be more likely to take out a revenue contingent loan, than seek finance under the government’s current small-to-medium enterprise (SME) loan guarantee scheme.

The small business revenue contingent loan, as recommended in the Ombudsman’s COVID-19 Recovery Plan, would be Federal Government-funded and capped at a percentage of the small business’ annual revenue.

Repayments would be required once turnover reached a designated level and calculated on a percentage of turnover.

“Access to finance is critical to small business survival, particularly with a number of support measures scheduled to end or begin phasing out in the coming weeks” Ms Carnell said. 

“Right now, small businesses are scared to take on any additional debt because they don’t know what’s around the corner and how any possible further lockdowns might impact their capacity to make loan repayments.

“A revenue contingent loan would operate in a similar way to HECS, with small businesses only required to start repaying once turnover recovered to an agreed level. If revenue was to drop below that level, payments would cease," Ms Carnell said.

“Even in the best of times, many small businesses struggle to secure finance, with a recent Sensis report revealing that of the dwindling number of small businesses that applied for a loan in the past three months, about one in four had been knocked back.

“That research also showed about three-quarters of SMEs surveyed reported a drop in revenue, with more than 40 percent expecting sales to decline significantly.

“Even with Government taking on 50 percent of the risk under its loan guarantee scheme, loans continue to be subject to bank credit assessment processes, which means small businesses with falling revenue have an uphill battle to secure finance," she said.

“Of course, the proposed revenue contingent loan would require businesses to satisfy a viability test to be conducted by an accredited financial adviser.

“A revenue contingent loan would give small businesses the confidence they need to seek funding to get them through this crisis, so they can grow and employ.”



THE AUSTRALIAN Small Business and Family Enterprise Ombudsman, Kate Carnell has urged the Federal Government to abolish fringe benefits tax (FBT) for at least two years "to provide a much-needed cash flow boost to the economy and support struggling small businesses".

In a letter to Treasurer Josh Frydenberg, Ms Carnell argued this small change to the tax system would provide a big boost to small businesses in the industries hardest hit by the COVID crisis.

“Small businesses are unfairly impacted by the fringe benefits tax,” Ms Carnell said.

“As it stands, small businesses are required to pay FBT on items that large businesses often provide in-house to retain staff such as meals, gyms and childcare centres. Larger businesses can actually claim some services as business expenses, without paying FBT.

“But small businesses that provide the same benefits to their teams offsite have to pay FBT," Ms Carnell said. “A the same time, high rates of FBT acts as a disincentive to businesses spending with small businesses, particularly those in the hospitality and tourism sectors which are hurting the most right now. 

“A weekend away, lunch at a restaurant or a team bonding game of golf, all attract FBT.  

"FBT is discouraging businesses from spending with small businesses, which reduces the amount of money flowing into the economy.

“Fringe benefits tax accounted for less than 1 percent of government revenue in 2019/2020 and that figure is likely to be even less in the current financial year due to the economic downturn," she said.

“Abolishing the FBT would cost no more than $4 billion a year to the government but it would be an effective support measure for small businesses and also stimulate cash flow into the economy at a time when we need it most.

EY modelling done on behalf of Tourism Accommodation Australia (TAA) and the Australian Hotels Association (AHA) indicates suspending FBT on accommodation, meals and beverages alone, would produce economic returns of up to 3.8 times the direct cost to government.”


THE NUMBER of registered financial advisers in Australia decreased 16 percent through the 12 months to June 2020, dropping to 22,334 in total, according to Rainmaker Information’s Financial Adviser Report.

During the June quarter, 556 financial advisers registered with new licensees while 1,460 ceased registrations. This resulted in a total number of advisers, joining new licensees for the year, od 3,997.

Rainmaker Information executive director of research, Alex Dunnin said further analysis of these results indicated that nearly 7,500 advisers ceased registrations with a licensee in the same time period. This number is down 14 percent from the previous 12-month period of June 2019. 

“These movements continue to follow the trend that the financial advice industry has experienced since the release of recommendations from the Royal Commission,” Mr Dunnin said. 

“This was followed by tighter education requirements and exams mandated by the Financial Adviser Standards and Ethics Authority, while COVID-19 has no doubt impacted the industry as well.

“This is the seventh consecutive quarter of decreasing financial adviser numbers, bringing the size of the industry back to June 2016 numbers," he said.

“Financial advisers aligned to banks continue to exit the industry in greater numbers, falling 25 percent in the 12 months to June.”

Institutional or bank-aligned licensees account for 52 percent of advisers, down from 58 percent a year ago. Non-institutionally owned licensees now hold 48 percent of advisers, up from 42 percent through the same period.

The five licensees with the largest number of new advisers are State Super Financial Services, Fortnum Private Wealth, Synchron, Lifespan Financial Planning and Interprac Financial Planning.


About Rainmaker Information

Rainmaker Information is a privately held Australian company founded in 1992. The company has established a reputation as a leading financial services information publishing house in Australia providing marketing intelligence, research and consulting services on the wealth management industry and forms part of the Rainmaker Group of companies.



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