Aid for struggling businesses
A TAX break for small businesses and a cash payment to parents of school-age children ahead of the carbon tax price hikes will be two sweeteners in an otherwise tough federal budget to be delivered tomorrow.
A TAX break for small businesses and a cash payment to parents of school-age children ahead of the carbon tax price hikes will be two sweeteners in an otherwise tough federal budget to be delivered tomorrow.Up to 110,000 loss-making small businesses will be cushioned from the effects of the two-speed economy with a tax break costing $700 million over three years.Businesses will be able to claim losses of up to $1 million against tax they have paid in the previous two years. A business claiming the full amount would get a refund cheque of $300,000 representing the company tax rate of 30? in the dollar.The budget will also put hundreds of dollars into the pockets of 1.3 million families with school-age children ahead of higher prices from the July 1 introduction of the carbon tax.The existing refund for school expenses which most families do not claim fully or at all will be replaced with a "Schoolkids bonus" of $410 a year for each primary school child and $820 for high school students.It turns a rebate that required receipts into a general payment at a time when the government has been under fire over cost-of-living pressures.The bonus will start next January and will be paid twice yearly. But all eligible families will receive a lump sum next month for their existing entitlement for 2011-12 without having to produce receipts or make claims. Loading it into this financial year will help the government deliver its promise of a surplus for 2012-13.The new scheme, welcomed by parent groups, will cost $2.1 billion extra over five years.But shadow treasurer Joe Hockey said: "The Labor Party is panicking about the impact of the carbon tax on everyday Australians and they are trying to give people a sugar hit with an upfront payment."Coalition education spokesman Christopher Pyne said it was "just another form of carbon tax compensation that can be spent on anything at all".In his fifth budget, Treasurer Wayne Swan will pitch to low and middle income earners and to small business. The well-off will be hit by measures including a crackdown on their superannuation tax break, but there will also be tightening of welfare, including for single parents and welfare recipients who travel overseas for more than six weeks a year. The crackdown will not affect pensioners.A good reception for the budget is vital for Prime Minister Julia Gillard, who has faced a new bout of leadership speculation over the past week.The budget will produce a massive turnaround from a deficit of about $40 billion to a small surplus probably between $1.5 billion and $3 billion. Its aim is to allow room for monetary policy to take more of the weight in economic management. The markets expect more interest rate cuts later in the year.Mr Swan said the "modest" surplus would "build up over time". He told the Nine Network that "not everybody is in the fast lane of the resources sector". The ability of small businesses to carry back losses a measure that originally came out of last year's tax forum would give from July 1 businesses that "strike choppy water" the certainty to be able to invest.