FEDERAL BUDGET: Small business tax cuts, lending help

The Rudd Government is set to boost business lending competition and make tax cuts available to owners

FEDERAL BUDGET: Small business tax cuts, lending help
<font color=red>FEDERAL BUDGET:</font> Small business tax cuts, lending help
By Samantha Freestone | May 12, 2010

The Rudd Government will boost business lending competition and honour its promise to make tax cuts available to small business owners as a part of the next Budget.

A phased cut in the company tax rate to 28 percent has been promised with small businesses gaining access to the cut earlier than corporate entities, from 2012 13.

Also in the Budget, a new "instant write off for assets worth up to $5,000" has been awarded to business.

Treasurer Wayne Swan says depreciation for other assets will be simplified, reducing complexity, cutting red tape and providing up-front tax relief.

"Roughly a third of the package will be used to ensure that we save rather than squander the benefits of the current boom, and translate higher economic growth and wages into long term benefits and more secure retirements," he says.

Swan is pushing bonds as a lending option with tax incentives for businesses which "consider corporate bonds as a way to diversify their investments".

"Over time, this is expected to put competitive pressure on bank lending rates to business, and also reduce the amount of wholesale funding which our banks are required to raise in international capital markets," he says.

Key terms to be disclosed will include the terms of the offer and the ability of the bond issuer to meet its interest and repayment obligations.

For subsequent bond issues, businesses will then be able to easily supplement this initial 'base' prospectus with an update to investors setting out the terms of the new bond offer, plus any new information investors will need to make an informed decision.

Details on this change are contained in an ASIC Class Order available on the ASIC website.

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