If you run a small business in Australia, you already know the weight of it. The early starts, the late finishes, the payroll you have to meet, and whether or not your clients have paid their invoices. What you probably don’t expect is to pick up the morning news and find that your sector, the one employing nearly a third of the country’s private workforce, is being discussed as a problem rather than an asset.
That needs to change. And as grant consultants who work directly with Australian small businesses every day, we think it’s worth saying plainly.
The Numbers Governments Should Be Repeating, Not Ignoring
Before we get into policy, let’s establish what small businesses in Australia actually represent.
According to the Australian Bureau of Statistics, about 2.66 million small businesses are operating across this country. The ABS defines a small business as one with an annual turnover under $10 million and up to 20 employees. Within that definition sits a workforce of roughly 5.2 million Australians, approximately around 5.2 million workers.
According to the Council of Small Business Organisations Australia (COSBOA), these businesses contribute close to one-third of the total GDP of Australia and generate nearly $600 billion in economic activity each year.
- 3 million businesses.
- 5 million jobs.
- 6 hundred billion dollars.
These figures highlight that small businesses are the national cornerstone of the Australian economy and must be prioritised in policy design to ensure their continued contribution.
How Political Discourse Has Shifted the Narrative
Tax reform, housing affordability, wage policy. Pick any of these debates from the past few years, and you’ll find small businesses somewhere in the middle, not as the subject of the conversation, but as a convenient target in it.
Whenever politicians are in Capital Gains Tax or negative gearing mode, small business owners tend to become the bad guys who have been benefiting from an unfair system at the expense of workers. Payroll tax discussions treat the threshold as a loophole rather than a structural feature. The framing shifts depending on who’s talking. The business owner ends up on the wrong side of the argument before they have said a word.
Policy follows narrative. When the prevailing story in Canberra is that small businesses are tax avoidance structures, the legislation that follows tends to reflect that view. Thresholds do not get indexed. Concessions get reviewed. Compliance requirements grow.
The real-world impacts sit on your desk in forms that are difficult to note unless they compound. Payroll tax thresholds have not kept pace with wage growth, so you are hitting the obligation earlier than operators did a decade ago, at a point where your margins haven’t grown to match. One year, a budget includes provisions for writing off assets; the next year, it doesn’t. This makes the reality of how difficult it is to plan a capital purchase beyond a year. Grant programs built around multi-year financial records shut out the operators who need the money most: the ones still new enough to be fragile.
It is what happens when policies are designed with the right understanding of small businesses, opening opportunities for meaningful reform and support.
None of these outcomes is accidental. They reflect a policy culture that doesn’t consistently treat small businesses in Australia as a national priority.
What the Government Actually Owes Small Business
Let’s be specific, because vague calls for “support” don’t translate into anything useful at your tax return or your cash flow statement.
A government serious about its small business sector would start with compliance costs. The ATO’s own data shows that small businesses spend an average of $23,000 per year just on tax compliance. That’s not tax paid. That’s money spent proving you’ve paid correctly. For a business turning over $500,000 a year, that’s nearly 5% of revenue going to paperwork.
The Ombudsman’s 2023 report shows that over 60% of small businesses experience cash flow issues at any time, highlighting the urgent need for policy reforms.
The most direct fix is payment terms legislation with real penalties when large businesses pay late. Other countries have built this. The Prompt Payment Code in the United Kingdom has enforcement mechanisms. Australia keeps producing voluntary codes and waiting for large corporations to do the right thing on their own timeline.
That is not a policy. That is optimism with a letterhead.
While grant programs like the R&D Tax Incentive and state schemes exist, the difficulty in navigating them prevents many small businesses from accessing the support they need to grow.
We see the consequences of this every week. A manufacturer in Western Australia qualifies for an energy efficiency grant worth $40,000 and has never heard of it. A tradie in regional Queensland has developed a genuinely new process in his workshop and assumes R&D incentives are for software companies, not him. An aged care provider applies for a workforce grant six weeks after the round closed because no one flagged that it was open.
The money was there. The eligibility was there. The businesses did not know.
The Tax “Avoider” Myth and What It Costs You
Political conversations about tax reform often lump small businesses in with large multinational corporations that engage in tax avoidance. This is not only factually wrong, it actively shapes policy in ways that hurt you.
Small businesses in Australia operate under one of the most closely scrutinised tax regimes in the OECD. The ATO runs specific small business benchmarking programs that flag operators whose income and expense ratios fall outside industry norms. Small business owners are audited at a higher rate per capita than many other taxpayer categories. The tax concessions available to small businesses, including the small business CGT concessions, the instant asset write-off, and simplified depreciation rules, exist because Parliament recognised that the compliance burden on smaller operators is disproportionate without them.
Using those concessions is not avoidance. It’s the tax system working as Parliament designed it to work.
The conflation of legal tax structuring with avoidance, when it finds its way into political discourse and then into policy proposals, produces outcomes like removing small business CGT concessions without replacing them with anything meaningful, or tightening trust distribution rules in ways that hit family-run businesses hardest.
If you’ve been made to feel like claiming your legal entitlements is somehow questionable, that’s a policy communication failure. One that costs you money.
What a Pro-Small Business Policy Environment Actually Looks Like
We’re not here to argue for any particular political party. We’re here to tell you what the evidence says works.
Countries that maintain thriving small business sectors tend to share a few characteristics in their policy settings.
Payroll tax thresholds should be indexed to wages so that businesses don’t face a new compliance burden each time wages go up. Cash flow from larger businesses to small business suppliers ensures we have someone to pass on whatever we save by not having an increase. New South Wales introduced a Supplier Payment Code some years back. It’s voluntary, but it signalled what’s possible. The UK’s Prompt Payment Code offers a more enforceable model worth examining.
They fund small business grant programs at a meaningful scale and invest in making them accessible. Not accessible in the sense of a 47-page application form with a six-month processing time. Accessible in the sense of plain-English eligibility criteria, short-form applications for grants under a certain threshold, and proactive outreach to sectors where uptake is historically low.
They also view small business owners as rational economic agents rather than the wards of the state that much policy seems to treat them as. Small businesses do not need charity, but they need the support of good policy.
How to Make Sure Your Business Is Not Left Out
If you’re a small business owner reading this, here’s what we’d suggest doing right now.
Check your grant eligibility at least once per quarter. State and federal programs open and close throughout the year, and eligibility criteria change. The business.gov.au grants finder is a reasonable starting point, but it doesn’t capture every state-level program. A conversation with a grant consultant who covers your industry and state can help you find programs that the general directories miss.
Ensuring your financial records are up to date and in order for grant applications is important, not only for your accountant. A lot of grant programs will also demand your profit and loss accounts, your balance sheets, and sometimes your management accounts. If these are not already in a format that a grant assessor can read quickly, getting them there before you need them will save you time and improve your application outcomes.
Engage with industry associations that lobby on your behalf. COSBOA, your relevant industry association, and your local Chamber of Commerce all make representations to the government. The quality of that advocacy depends partly on how many members are engaged and how clearly those members communicate what they need.
The Case for Getting Louder
Australian small businesses are a major source of employment, they create a foundation for communities and play a key role in the country’s economic stability. These small local businesses are the ones that provide sponsorship for the footy club that keeps your town running. The main street that defines your suburb exists because small businesses chose to open there. The jobs that kept regional communities intact through the pandemic years were disproportionately small business jobs.
That contribution is real, it’s large, and it’s currently under-reflected in the political weight small businesses carry relative to their economic importance.
As grant consultants, we work within the system as it exists. But we also think it’s worth naming clearly that the system could do substantially more, and that the political narrative around small business ownership needs to shift from suspicion to recognition.
You built something. You employ people. You pay your tax. That deserves a policy environment that works with you, not around you.
Talk to us today about what grants and incentives your business is currently leaving on the table. The programs are there. You need someone in your corner who knows where to find them.
