FOR IMMEDIATE RELEASE
Business Owners Put At Risk By Government Small Business Tax Break
The Government’s dangling of a fat tax carrot to business owners with the aim of stimulating the economy
may actually be having a negative impact on small business, warns 10X CEO, Nic Clark.
The Small Business Tax Break, which provides an incentive for small business owners to invest in eligible
assets through a 50 percent tax deduction, has resulted in what Nic Clark describes as inefficient spending
on the part of business owners. “What seemed like a lucrative incentive for small business owners could
actually
be a misleading lure
that encouraged
some small business owners to buy assets they couldn’t
afford or that would be much more wisely spent on marketing activities to generate customers,” says Nic.
“The
tax break applied
only to tangible, depreciable assets like cars, computers
and hardware, laptops,
smartphones, and furniture – in other words, expensive items that businesses don’t necessarily need for
growth. Unfortunately, many businesses jumped at the opportunity, as evident in the sudden resurgence
of the previously-failing car industry, which experienced an 11.3 percent growth in commercial vehicle
sales after the introduction of the 50 percent allowance.”
According to Nic, the thousands of dollars that some business owners have spent on cars and computers
with the allowance would have been more effectively spent on
production and
marketing-related
activities, which help attract customers and contribute to business growth.
Nic says that many businesses that have
spent
to obtain
the allowance
could
be
negatively impacted
in
the following ways:
Decreased profits, affecting
business owners’ futures. “In focusing on reducing tax, many
businesses have actually tried to reduce their profit as well, truly losing sight of the bigger
picture,” says Nic. “Lower profits lower the value of your business, which for baby boomers can
seriously affect their retirement plans when the time comes to sell their business.”
Increased outflows, affecting business growth. “Interest rates may be low and conditions may
look as if they’re improving,” says Nic. “However, whether you’re purchasing an asset outright or
financing it, this purchase represents an outflow that will restrict your cashflow in some way and
will inhibit your business’s ability to grow.”
Nic Clark says that a strong push to spend by the government made many business owners forget that the
allowance was not a refund or
a rebate. “Small business owners shouldn’t assume that all government
initiatives are in their best interests. Although this increased spending benefits the economy, it’s
ultimately a knee-jerk reaction that has encouraged hasty spending, and does not give businesses any real
cash advantage in the end.”
In this case, the government-recommended spending and a focus on trifling tax matters has left many
business owners out of pocket for the new financial year, meaning they have less cash to spend on the
more critical activities to surviving tough times and growing their businesses.
About Nic Clark
Nic Clark is the CEO of 10X Limited, a public company specialising in the setup of business development
divisions within accounting firms across Australia and New Zealand. Nic has had 16 years hands on
experience advising hundreds of small-to-medium sized businesses throughout Australia, New Zealand,
the USA, Canada and the UK. He has assisted in the completion of over 890 comprehensive business plans
covering a broad range of business areas such as Management, Marketing, Operations, Human Resources
and Finance.
For more information or to arrange an interview with Nic Clark please contact:
Monique Van Dijk on 0400 684 079 or monique.vandijk@10x.com.au
Further reference information available at:
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