CEO Corner: How the 2012 Federal Budget Will Affect Businesses

Written By CEO Soong Chong

There has been widespread coverage in the news about the newly released 2012 Budget. It is very clear that families will benefit from this budget with reported boosts of handouts & welfare payments, but how will the budget affect businesses?

The main benefit to business with this new budget is that small business will benefit from the introduction of a new initiative which allows them to carry back losses against previous revenue to receive a refund against previously paid tax. From the 2014 financial year the loss carry-back rules will allow losses to be applied to the two previous income years. Prime Minister Julia Gillard predicts this new initiative will benefit up to 110,000 companies by up to $300,000.

In addition from the 1st of July 1, 2012 small businesses with a turnover of less than $2 million, can claim an immediate tax deduction for assets purchased which cost less than $6500.

There is also a benefit to big businesses with the main selling point of this years budget being “sharing the wealth of the mining boom”. From 1 July 2012 the government will introduce the Minerals Resource Rent Tax which will capture a better financial return for non-renewable resources that are used. Similarly the government has also extended the already existing Petroleum Resource Rent Tax to gas & onshore oil projects from 1 July 2012. Revenue raised from these improved resource taxation arrangements will be used to fund further tax reforms to help both households & businesses adapt to structural change, as well as boosting retirement incomes.