Small businesses expected to benefit from budget

STRUGGLING Hunter small businesses are set to benefit from tax relief changes expected to be announced in tonight’s budget.

Federal treasurer Wayne Swan is expected to deliver a budget surplus which he said would allow the Reserve Bank of Australia to further cut interest rates for business.

Mr Swan would not commit to the federal government’s planned 1 per cent tax cuts for small and large businesses.

But the government is scheduled to deliver some tax relief for small business courtesy of a new loss carry-back initiative.

The new scheme would allow businesses to claim losses up to $1 million against tax they have paid in the previous two years but would only be applicable to businesses structured as corporations.

Kellie Wright from Forsythes Accounting said the new system would be a welcome change in uncertain times for small business in the Hunter.

‘‘Businesses that are struggling in their start-up would benefit if they have a good first year and face a downturn in operations the following year,’’ Ms Wright said.

‘‘They will be able to access a refund of the previous year’s income tax and use those funds to assist in their downturn by reducing their tax burden.

‘‘This effectively allows them to average their income and hence their tax liability over a couple of years.’’

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