As the countdown to the Australian Federal Election makes its way inside 2 weeks, there’s been much conjecture as to what tax cuts, exemptions or implications will be of the best benefit to small business owners and operators.

Bill Shorten launched Labor’s election campaign with promises of tax breaks for small businesses that hire young or older employees in a bid to boost the fortunes of the long-term unemployed.

How does this work exactly?

If Labor wins the election, small businesses with less than $10 million in annual turnover will fall within the parameters for the tax cuts, that will see businesses taking on new employees who are under 25, over 55 or carers returning to the workforce, receive a 30 per cent tax benefit.

Director of Operations at leading businesses for sale portal, Mary Tamvakologos, said small businesses would be able to claim a 30 per cent tax deduction for up to five new workers’ salaries for their first year of employment, capped at $50,000 per company.

“The benefits of such a policy would be two-fold,” Mrs Tamvakologos explained.

“Not only would this policy aid small businesses with cash flow, but it would significantly assist those that have been unemployed for three months or longer.

“Thirdly, it would provide small businesses with the opportunity to hire highly skilled professionals that may otherwise have been overlooked,” she added.

Labor has also promised a crackdown on multinational tax avoidance by denying deductions to companies that send royalties to tax havens overseas.

The ATO’s Single Touch Payroll

Both parties have focused on weeding out businesses that don’t pay correct super and the introduction of single-touch payroll will make it easier for the tax office to see when an employer isn’t paying.

In recent budget papers, the Australian Taxation Office was given more than $50 million in additional funding over the next five years to “support the expansion of the data collected through Single Touch Payroll”.

Given this, tax experts say the next few months will be critical for getting pay processes in order before a large cohort of small businesses have to start using the digital payroll systems from July 1.

The ATO has promised it will not penalise businesses for mistakes within the first year of using the digital payroll systems.

The single-touch payroll project is designed to streamline all payment information by requiring companies to lodge details of payroll when they run it, rather than months later.

Crackdown on Superannuation

The focus on businesses that don’t pay the right amount of super will have an impact no matter who wins government.

While many Australian businesses already using digital software are aware of the single-touch policy, those still operating older forms of payroll may not be prepared and be unaware of the pending changes.

Mrs Tamvakologos said reporting super payments through single touch payroll was an important step toward making sure employees were paid their correct entitlements.

“This may be a good time for small business owners to have a look at their current superannuation payment policies and make sure that they conform with the ATO’s pending new regulations,” she said.

Cashflow-challenged businesses have been warned there will be no wiggle room for delaying the payment of superannuation entitlements once single-touch payroll comes in for smaller employers from July 1.

Penalties for late payment of super include having to pay late payment charges and interest, as well as fines.

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