By SONJA KOREMANS
IT’S the tale of two Joes.
Joe Hockey in Canberra wants small business owner Joe Coorey in Warwick to help get the country moving.
As part of the Treasurer’s Budget effort to encourage businesses like Joe’s to grow their operations, owners will be able to write off assets worth up to $20,000 until July 2017.
But Joe, a retail veteran, reckons it won’t be sending him on a spending spree just yet.
“There’s a lot we don’t know about the initiative, what can and can’t be claimed, so I would be getting advice first,“ Joe said.
“I don’t like overbuying – there’s no point going into debt just to get a tax incentive.“
But Joe believes it’s good news for the region’s small businesses, particularly those that regularly update machinery, vehicles, office equipment, and electronic devices.
His clothing store – J&J Coorey – has had its doors open since 1924 and he said the costs of running a small business had never been higher.
“I have relatives in various businesses and all of them seem reasonably happy about the incentive, especially those in the food business where you would imagine a lot equipment can be claimed.“
Joe and wife Jackie spent $90,000 on their shop’s fit-out a few years ago, so they’re on the investing sidelines for now.
But Jackie wants new carpet in the store, and Joe wants a new work vehicle so they haven’t ruled out loosening their purse strings before the scheme’s up.
In return, the Abbott Government hopes its investment stimulus will boost employment and fire up the economy.
Warwick Chamber of Commerce vice-president Brian Tombs said small businesses in the region applauded the tax break.
“Most of our members indicate they want to spend money in the wake of the budget announcement and are just waiting for the asset write-off to be passed through the senate,“ Mr Tombs said.
The Institute of Public Accountants (IPA) warns that some businesses are assuming the scheme is wider in eligibility and more generous, believing it would pay out on a dollar-for-dollar basis.
IPA chief executive officer, Andrew Conway said although the tax deduction could be used on multiple sub-$20,000 purchases, it merely reduced the taxable income of any given business.
“Simply put, if a small business makes a profit of $50,000, the tax payable at the new company tax rate would be $14,250. The deduction of business related assets up to $20,000 would reduce the taxable profit to $30,000 with a tax payable amount of $8,550; a tax saving of $5,700,“ Mr Conway said.
“For a non-incorporated small business the tax saving will be dependent on the individual’s marginal tax rate.“
