The increase in the accelerated depreciation threshold to $20,000 – up from just $1000- should stimulate the photographic industry both on the investment side – upgrading plant and equipment – and the sales side – increased sales to professional photographers and other small businesses.
‘I think that we should be extremely successful in the run to the end of financial year,’ said John Ralph, Erina Camera House. ‘Many small businesses use cameras and most camera outfits fall under the $20,000 mark so that should give them an extra reason to buy at this time.’
‘We are telling our customers that it is a good time to buy that new camera or studio flash kit or whatever,’ said Francis Guidici from Hobart’s leading professional reseller, Walch Optics.
Photo printing equipment and consumables supplier Photo Direct has been lightning fast off the mark in response to the Budget. By Thursday it had two HP wide format printer and consumables offers out to its customers under the heading: ‘Bag Yourself A Budget Bargain.’
Photo Direct marketing manager Tracy Lints said they were delighted with the asset write-down move. She felt it was an acknowledgement by the Federal government that it was aware that small business in Australia was struggling.
She also noted that while many photo stores have been procrastinating on investing in upgrades to printing equipment or introducing new capabilities, the Budget change might just encourage decisions to be made sooner rather than later.
‘We won’t be taking advantage of it [the asset write down, not the Photo Direct offer!] this year, but I will be in July,’ said Chris Harris, Bay Park Photos, Tamworth.
But then again, you can’t – or at least shouldn’t – spend the money if you haven’t got it, as Steve Kelly from Beau Photos, Beaumaris, noted: ‘You have to have $20,000 in the first place to be able to spend it,’ he said. ‘I will be purchasing a new computer in the next week or so, but I was going to do this anyway. I will not be buying anything else.’
While reluctant to comment extensively until he had examined the ‘devilish detail’, Camera House general manager, Paul Shearer saw the asset write-down as positive in principle:
‘I’m sure it will encourage Camera House members to buy,’ he said. ‘I haven’t had time to discussed this with any member yet.
‘The benefit for our businesses to have the ability to immediately claim from capital equipment under $20,000 can only assist them and any other small business in Australia.
‘Small business is the heartland employer in Australia and without re-investment strategies and GST protection many small businesses will be forced to reduce salaries,’ he added.
The pros light up
Top Australian professional photographer, publisher and small business accountant Peter Eastway is uniquely positioned to comment on the change to be enjoyed by businesses with a turnover of under $2 million.
‘Of course, it doesn’t really mean you get a better tax deduction, just that you get it in the first year instead of spread over four of five years,’ he told Pro Counter earlier this week. ‘I think for a lot of photographers watching their cashflow, the immediate deduction will be a help to purchase sooner rather than later.’
Indeed, one of the perhaps unintended consequences of the change being immediate is that there could be a massive spike in sales between now and June 30 as businesses rush to make their purchases in time for the 2014/15 financial year.
The question is whether this will then create a bit of a lull early in the 2015/16 financial year.
Peter Eastway points out that many photographers finance expensive purchases rather than lay down cash, but they’d still be eligible for the immediate benefit provided it’s financed through ‘a loan or chattel mortgage’, and not a lease.
He added that photographers – and for that matter retail businesses – planning to utilise the new measures should first discuss it with their accountant.
Melbourne photographer, Bret Salinger, said to Pro Counter he will take advantage of the immediate tax deduction, which couldn’t have come at a better time for his business.
‘I have a workhorse 24-70mm lens that might be headed out to pasture so am in the market for a replacement. I’m also eyeing another fast prime lens to add to my kit, so this decision could well see me making a purchase of lenses prior to June 30 to take advantage of the announcement,’ he said.
Bret enthused that the $20,000 threshold has also opened up other possibilities, such as a new high-end computer.
‘From my point of view I think as a stimulus measure it offers terrific benefits to small business owners, because it would enable me to benefit immediately from the 100 percent tax deductibility of these unusual and expensive asset purchases.’
Brisbane commercial photographer, Angus Martin, also said the break will ‘push him over the edge’ to purchase new photographic equipment and/or computers. But given how poorly the 2014 budget travelled in the Senate, Angus says he will play it safe and sit tight until the policy is given the all clear.
Small business tax cuts
The Federal Government also announced a ‘5 percent’ tax reduction for small businesses, starting from July 1, 2015.
‘They’re giving them (small businesses) something that will really motivate them to go and spend and buy things and grow their business and save their business and employ people and get cash flowing through the economy,’ Peter Strong from the Council of Small Business told the ABC.
Peter Eastway was also optimistic about the benefits photographers and photo retailers with incorporated business structures should experience from the tax cuts.
‘Most pro photographers will benefit from the 1.5 percent income tax reduction – which is called a 5 percent reduction because 1.5 percent is 5 percent of the 30 percent corporate rate.
‘Even better, as I understand it, the franking credits will remain at 30 percent which impresses me. In the past, governments have introduced ‘tax savings’ for small business, but when you did the income flow through to the eventual owners, there was often no tax saving at all. Of course, all this is subject to reading the fine detail in the future, but on the face of it, it’s a good outcome.
‘Regardless of how good the final tax benefits are, what I applaud is that the government is finally putting a positive spin on the future,’ he said. ‘Finally we seem to have some direction, rather than all the negative news that curtails business confidence. Fingers crossed it works for us all.’