Retailers surge on Budget boost

INVESTORS have piled into electronics, hardware and vehicle retailers on expectations they’ll benefit greatly from the Federal Government’s small business package designed to increase spending.

The Abbott Government has allocated $5.5 billion towards the nation’s two million small businesses with tax cuts and incentives.

The key measures include a 1.5 percentage point tax cut for the 96 per cent of companies with less than $2 million in turnover and allowing them to immediately write-off assets worth up to $20,000 from July 1.

The move is expected to spark a boom in sales for both new and used vehicles, computers, mobile phones, hardware and office equipment.

Morningstar retail analyst Farina Parsons said the small business package had increased investors’ confidence in retailers with share prices in electronic and other retail stocks rising yesterday.

“The tax write-off … will particularly benefit retailers like JB Hi-Fi and Harvey Norman,” she said. “It’s really going to help in the discretionary space.”

JB Hi-Fi chief executive Richard Murray said the removal of the fringe benefits tax on portable electronic devices was also a major boon.

“It means people can salary package it, which makes it more attractive,” he said. “Another good outcome for us is the fact small businesses can write-off investments in technology.”

Carsales.com chief operating officer Cameron McIntyre said benefits would also flow to used and new car retailers.

“The cut to the company tax rate combined with an immediate write-off of acquired assets has created the perfect opportunity for small businesses to upgrade their vehicles,” he said.

The company tax rate for incorporated small businesses would be cut from 30 per cent to 28.5 per cent and there would be a 5 per cent tax discount for unincorporated businesses, up to a $1000 cap.