The 2015-16 Federal Budget delivers a reduction in the company tax rate to 28.5 per cent for businesses with a turnover less than $2 million. Unincorporated businesses will also receive an annual 5 per cent tax discount up to $1,000.
R&CA CEO John Hart said the hospitality industry will be a significant benefactor of the Budget.
"Approximately 93.1 per cent of all restaurant, café and catering businesses in Australia are small businesses. The average turnover of these operators is $1 million. Tax relief in a tough economic climate is welcomed by the sector.
"The ability to write-off assets up to $20,000 will also mean businesses invest in new equipment and technology that continually improves the dining and culinary experience in Australia," Hart said.
New initiatives
Under the Jobs and Small Business package, businesses will also be able to immediately deduct professional costs associated with starting a business, business registrations will be streamlined, and restrictions on crowd-sourced equity funding will be removed.
"These initiatives will result in significant cost savings to small businesses, particularly in the early stages of the business lifecycle," Hart said.
"The restaurant and catering sector is one of the most dynamic sectors of the economy with 7,000 new businesses establishing themselves each year. Anything that makes it easier for these businesses to get up and running is good for the industry.
"Allowing businesses to immediately deduct professional costs and streamlined business registration will assist small hospitality businesses at the time when their resources are stretched very thin.
"The average capitalisation of a restaurant business is around $100,000. Being able to save on upfront costs and being able to write these costs off when they are incurred will mean businesses are more likely to spend the money on getting the right advice.
Fighting first-year challenge
"Most restaurant businesses find it difficult to survive the first year, these initiatives will ensure they receive a helping hand when they need it the most," Hart said.
Hart said it is also pleasing to see funding for Tourism Australia, the country's tourism marketing agency, increased in the budget to maintain the agency's funding against currency movements.
"Increased funding for Tourism Australia gives the sector confidence the marketing spend of this agency will be maintained in real terms, and it will continue to promote Australia to our key source markets, including China.
"We know great food and wine is a key driver for this market; Tourism Australia's Restaurant Australia campaign is pivotal in capturing additional expenditure from these visitors," Hart said.
