FINANCE experts agree small to medium enterprises (SME) will benefit most from the Federal Budget, but developers, farmers and miners are tipped to be the biggest losers.

Tax experts are confident Federal Treasurer Wayne Swan’s 2012 Budget will deliver a welcome shot in the arm to SMEs.

Deloitte confirms the Federal Budget’s inclusion of the loss carry-back will allow businesses to claim losses of up to $1 million against tax paid in the previous two years.

“A business would be refunded up to $300,000 – representing the company tax rate of 30 cents in the dollar,” says property tax partner Joe Galea.

“It will probably be more beneficial for SMEs instead of larger corporations – a positive as SMEs are struggling after having gone through the more prosperous 2009-10 period.”

Grant Thornton echoes the optimistic outlook for battling SMEs.

“For SMEs it will have the benefit of protecting jobs,” says tax partner Paul Banister.

“Those in retail, property and travel may be best placed to benefit as they are suffering at the moment.”

Galea suggests there may be debate over whether interest should be paid in addition to the refund.

“The government will hold taxes paid for several years before businesses can claim losses,” he says.

“If you had a taxable income of $1 million and paid $300,000 in taxes before making a loss, you could get the tax back. We are contemplating whether they would also pay 8 per cent interest on top of that worth up to $24,000.”

However, the loss carry-back will not be made available to non-trading companies.

“This is a loss for businesses run by trusts and partnerships. The government’s theory is other types of businesses have an easier ability to offset losses, but that is a short-sighted view as busy entrepreneurs have little time for lengthy procedures,” says Banister.

“Trusts have the toughest regime for carrying forward losses and the government’s failure to give any relief is certainly not a welcome move.”

Queensland’s ailing property market will not be so fortunate either, with the Budget speculated to end the Tax Breaks for Green Buildings Program that would otherwise have commenced on July 1.

“The government has not reconfirmed the program would stay and it not being implemented would be a blow to commercial construction of offices, shopping centres and hotels,” says Galea.

“This measure was hoped to stimulate redevelopments and retrofits by taking buildings from a NABERS rating of two to new heights. There would be a lot of disappointed people in the construction industry if it goes on the chopping block.”

Banister describes the program as a generous concession.

“It would subsidise half the cost of retrofitting a building and going to provide a significant benefit for those wanting to make buildings more energy efficient,” he says.

“It is unfortunate the government might take it away and it will have an impact on investment decisions.”

Farmers and mining companies could also lose out, if observers correctly predicted the government would axe its diesel fuel rebate.

“When the 32 cents a litre is no longer subsidised it will have an impact,” says Banister.

“Primary producers will have to cover the cost and consumers will pay more. The mining industry warns the axing will also increase costs, making projects unviable for many small to medium explorers.

“Larger companies may have cash flow to absorb the extra cost, but the smaller the project the skinnier the margins and higher the risks are.”

However, the Labor minority government is unlikely to extend the Goods and Services Tax (GST) to overseas sales worth less than $1000, despite strong lobbying from the Council of Small Business Australia in its favour.

“GST is a complex thing that affects all businesses and has an impact right through the supply chain, so any change in GST needs to be dealt with carefully,” says Bannister.

“Removing the $1000 GST threshold for overseas sales would it make difficult to administer. The government is better off trying to resolve broader issues like retail service and competitiveness rather than creating additional compliance for minor sales.”

The Australian dollar today declined to $1.01 following last night's Budget announcement.

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