FOR PRESS 8 MAY 1977
EMBARGO; 7.00 p. m. ELECTORATE TALK
Tonight I would like to talk to you about some of the measures
which the Government has already taken to help small businesses
function and prosper for the benefit, not only of themselves,
and their employees, but for the good health of the community as
a whole.,
Small businesses are a significant part of the Australian economy,
employing 40 percent of the workforce. For manly members of the
community there is great satisfaction in being the proprietor
or partner in a small firm despite the often arduous nature of
such a responsibility.
The first of the measures taken by the Government to help small
businesses is the Investment Allowance Scheme. Undler this Scheme
percent of the material cost of a range of new plant and certain
improvements on primary production land, can be deducted from
income for tax purposes. After June 30, 1978, the Special Investment
Allowance will be 20 percent. In both cases, the allowances are
additional to the normal deduction for depreciation on the full
cost of the plant.
Another measure which helps business firms is the special trading
stock valuation adjustment deduction. Under this scheme the rise
in the cost of replacing trading stock, including livestock, is
being taken into account. So far this is partial. For 1976/ 77
the value of stock for tax purposes will be increased by half the
percentage increase in the goods component of the Consumer Price
increase between June 1976 and June 1977. This reform is designed
to protect firms from the impact on their trading produced when
the cost of replacing goods is higher than the amount by which
they have been written off.
The needs of small businesses were particularly in mind when the
Government decided to allow private companies to retain free of
undistributed income tax un to 60 ) ercent of their after-tax business
income. Previously, private companies could keep only 50 percent
of this income without incurring extra tax.
Primary producers are now able to take advantage of a spccial
scheme of income equalisation deposits. To avoid the special
disadvantages that fluctuating income from primary production causes,
they are now entitled to lodge deposits with the Tax Commissioner
to reduce the in~ come on which they pay tax in that year. That income
of course becomes taxable as part of the income for the year
in which it is withdrawn.
The modifications to the averaging system for primary producers
income will also have the effect of lowering the amount of
personal income tax to which they are liable.
All members of the community, of course, benefit from the
indexation of personal income tax which in July will once again
increase the take-home payof all people on the pay-as-you-earn
scales.
All these measures demonstrate the Government's commitment to
creating an economic climate in which businesses, small and large,
can expand and prosper. These benefits which the Government has
enacted are clearly of greater benefit than many of the assistance
measures, such as advice bureaux and the like, which are talked of.
These measures are hard-cash injection into small business
profitability enabling them to invest and create new job
opportunities. Taken together they constitute unprecedented assistance for small
businesses during a period when the rate of inflation is declining
and business profitability rising.
In these circumstances, it is to be expected that business
investment in plant and equipment should be increasing.
It is indeed gratifying to note that this is happening and that
during the calendar year of 1976 investment rose by 18 percent.
The economy is responding to the efforts of a Government which is
dedicated to returning it to economic health.
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