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By now small business owners have hopefully come to terms with the reality of the Clean Energy Future package and its practical implications on how you run your business. However, like many small business owners you may be feeling overwhelmed by all that the Carbon Tax means. While fully understanding everything there is to know about this subject is a very intensive, time consuming task, there are some things that can be done to get your business Carbon Tax ready in just a few minutes. Though the most direct hit to business is probably energy costs increasing, some small businesses may also experience effects of suppliers’ increased costs as well. The Australian Competition and Consumer Commission (ACCC) has created an enforcement and compliance unit to monitor cost increases, and has the power to fine businesses up to $1.1 million for misconduct such as price gouging. Basics The Carbon price began on July 1, 2012 at $23 a tonne, and will rise 2.5% per year in real terms. Also, beginning July 1, 2015, the Carbon price will be set by the market. Another basic: it is anticipated that the tax applies to approximately 500 of Australia’s biggest polluters – which illustrates the need and reason for the legislation. Business Compensation As with any legislation that involves businesses, the incentives are always a factor. So, let’s take a look at the business compensations associated with the Carbon Tax. Emissions-intensive businesses exposed to international competition will receive $9.2 billion by 2014-15 in industry assistance. This Tax will also see a $1.2 billion Clean Energy program for businesses, and an increase in the annual instant asset write-off threshold to $6,500 for small businesses. However, savings won’t just fall into the laps of small businesses. Small business owners must have a strategy to factor in the cost of the price on Carbon, to either keep them to a minimum or find equivalent cost savings. Where to Start A 2011 report, Managing the Commercial Implications of a Price on Carbon, released by KPMG warned that Australian companies ‘of all types and sizes and across all industry sectors will need to act decisively to manage the broad commercial implications of a price on carbon’. It also states that while most smaller businesses will not face direct liabilities, they will need to factor in the effect of the Carbon price that will be embedded in their supply chain, as well as the extent of their electricity usage, in order to manage changes to their business’s cost base. The implications to small businesses will be varied, but include: • The impact of a Carbon price on decisions related to mergers and acquisitions • The viability of investments which are designed to reduce carbon exposure • Monitoring the impact which the inevitable changes in technology have on the cost of business assets • Customer negotiations, costing and pricing strategies for products and services Other factors to consider include managing financial impacts such as a changing cost base, acting on opportunities to pass through costs, and identifying and responding to tax implications. Keeping all of these factors and implications in mind will help safe guard small businesses, and get them Carbon Tax ready. For more information about Tax Deductions in Australia and Medical Indemnity Insurance Australia please visit our website http://www.taxforhealthprofessionals.com.au/
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