Small businesses considering taking advantage of the tax deductions in the 2015 Federal Budget should do so with caution.
BDO partner-in-charge of business recovery and insolvency Rachel Burdett-Baker has warned against overspending.
Burdett-Baker said although the new incentives were certainly a positive for business confidence, organisations should ensure they are in a solid position before committing to additional expenditure.
“Small businesses across Australia are still doing it tough and for many of them cash flow is one of the biggest concerns,” Burdett-Baker said.
“Although the small business incentives contained in this year’s budget are certainly attractive, businesses should still be prudent with spending.
“If the availability of a tax deduction is the main reason a business is making an investment, they may be exposing themselves to an unnecessary risk.
“New spending still means cash coming out of the business – if it impacts on a business’ ability to meet its other financial commitments the tax deduction may not be worth it.
“It’s absolutely vital businesses work with their bank and other financial advisers to ensure any new spending – whether it’s eligible for a tax deduction or not – does not place pressure on the bottom line.”