The small business initiatives from last night's federal budget have been well-received by companies in the Australian IT channel.
The government announced yesterday that small businesses would immediately receive a tax deduction for assets costing less than $20,000 per item, up from the current $1,000 threshold. This "accelerated depreciation" initiative applies to an unlimited number of items and starts now, running until June 2017.
Treasurer Joe Hockey also reduced the company tax rate to 28.5 percent for businesses with a yearly turnover of less than $2 million. This is a 1.5 percent reduction from the current rate of 30 percent.
As a further growth stimulus, the federal government will provide a further 5 percent tax discount to unincorporated businesses with annual turnover of less than $2 million. This handout applies from 1 July.
[Related: All the tech news from Budget 2015]
"[The] tax deduction available for purchases up to $20,000 will incentivise small business to invest for growth," said Jamie Warner, CEO of North Sydney MSP eNerds. "As an MSP, infrastructure purchases go hand in hand with growth and so the budget announcement is quite pleasing,"
Warner, who is also the president of the Sydney chapter for the Entrepreneurs Organisation, praised the work of Minister for Small Business Bruce Bilson.
"[I] was lucky enough to sit with the Minister for Small Business, Bruce Bilson, in Canberra this year via a roundtable meeting to discuss the amendments to the Employee Share Scheme. I’m personally very supportive of the work that the Government and in particular Bruce Bilson is doing for small business."
The managing director of another managed services provider, XCentral's Philip Patelis, is also rapt with last night's announcements.
"It's great, small businesses really need this. We really don't do enough to encourage growth in small businesses," Patelis told CRN. "They should treat small businesses like first home buyers."
"The $20,000 break is another thing to help small businesses – very positive move… We could use [the breaks] for hiring staff or buying equipment for staff."
Next: how do small resellers feel about the budget?
CRN also spoke to two regional resellers that were happy with the federal initiatives.
Greg Williams, of Lincoln Computer Centre in South Australia, called the timing "perfect" for business customers in the run up to the end of the financial year.
"Spend $20,000 in June, get a $20,000 deduction in July. That's a good deal," he said.
Williams said there are some questions remaining on practicalities – using a car purchase as an example. "Would we buy something under $20,000 to get the instant deduction, or would we still buy the more expensive vehicle we need and take the normal depreciation, or would we go second-hand? That will be interesting to see how that plays out."
The asset write-off and low interest rates mean the incentive to borrow and invest in a business has "probably never been better", according to Williams, but he pointed out that consumer spending was also an important consideration.
With profits smaller than in years past, he doubted the tax rate would result in significant savings for his business. Williams also called out the move to make FBT no longer apply on computers bought for employees, saying the change was a good thing for salary packaging and better than the normal salary sacrifice arrangements.
Also welcoming the budget news was Dennis Evans from Dennis' Computers and Backup Service in northern Queensland, who said that once the changes pass the Senate he’ll be sending out emails to his clients.
"A lot of clients have servers and PCs over six years old. They’re just holding out because of the lack of confidence. Now they can write it straight off, I think they’ll jump on the bandwagon," he told CRN.
Evans is also eyeing a purchase for his own business – a wall-mounted battery recently unveiled by electric car company Tesla Motors.
"I’ve already sent emails out last night around how I can get hold of these and take advantage of that $20k," he said, saying the technology would help him reduce expensive power bills.
GE Capital's ANZ general manager of distribution finance Paul Mitchell said the tax breaks would "help improve the way financial institutions look at the serviceability of resellers in the channel".
"This in turn will, hopefully, have a positive impact on increasing liquidity in the channel. There are still, however, unique cash cycle constraints in the Australian ICT channel, and whilst last night’s budget announcements will help, financial institutions still need to work closely with the channel to promote greater liquidity in the sector."
Next: Bulletproof and Asset Guru have their say
Hosting provider Bulletproof's group director for sales marketing Mark Randall was another fan of the small business incentives.
"This budget is definitely a positive one for supporting startups, entrepreneurs, and the small business sector," he said. "It is great to see that employee share options will no longer be taxable upfront, bringing Australia in line with other OECD nations."
However, Randall is disappointed with a disjointed IT spending strategy for the public sector.
"While there are some good individual initiatives such as the $254m investment in digital transformation, there seems to be a lack of joined up thinking in the budget this year. For example, the Department of Finance is assigned with squeezing savings from IT, but they’re spending $17.6m on a new AFP Data Centre, instead of using cloud with proven cost savings."
Australian internet startup Asset Guru expects to win in another way – it provides an asset management solution for the small business sector. Founder Chris Petersen argued the changes will put asset purchases "front of mind" for the two million-plus prospects that the company has in Australia.
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