At the heart of North Melbourne cobbler Manfred Schopf's repair shop is a 30-year-old machine that he says is the best of its kind in Melbourne. But thanks to the federal budget, it may be headed to the heap.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
Mr Schopf owner of Manfred's Shoe Lounge, says the machine runs half the day, and it's loud; so loud it can be hard to speak to customers or to hear the phone ringing. He was already thinking of replacing it when Tuesday's budget made purchases by small businesses tax deductable up to $20,000 per purchase.
"It's a great machine. It does everything," he said. "But in 30 years, they will have made some improvements in the noise."
"It would cost me about $65,000, but $20,000 would definitely help."
Mr Schopf is one of thousands of small business owners around the country being encouraged to spend up now on improvements by a 5.5 billion small business package in Tuesday's budget.
Jay Magee just spent $40,000 outfitting her hairdressing salon Off the Top of My Head, on the first floor of the art deco Mitchell House in Elizabeth Street.
"I probably would have upgraded," she said, had the $20,000 tax deduction been available when she opened in February. She'd like to spend her federal windfall on air conditioning or art works.
"I provide a certain environment for my clients and good art work adds to that."
Jianna Quattrocchi, who owns gift shop Kitchen Capers in Errol Street, was thinking of new tills, or perhaps new computers.
"I think it's very good, actually, because small business makes the country improve and they will get more money from taxes and there will be more jobs," she said. "People will start spending more money."
But entrepreneurs trying to break into the high-growth startup market said the policy was a mixed blessing that could tempt business owners to try to game the system.
"Motivating businesses to go and spend on things that will grow their business, will hopefully create a ripple effect where all entities will benefit from the scheme," said Yanni Mastrokostas of mobile research startup MDI. "However, the instant tax write-off may be causing small business owners to plot on what can be deemed as a grey area between personal and business expenses."
And a spokesman for tax advisory company H&R Block said business owners needed to contain their enthusiasm.
"A sensible business operator won't be rushing out to spend the money," the spokesman said. "What we are telling our clients is that, if they are planning to make a purchase anyway, this is great. But don't just go out and spend the money to get a tax break. That's just a fool's errand."
