Around 350,000 small construction business are set to keep more of the cash they earn as the federal government pitches to small business in the lead up to the federal election.

Following on from last year’s reduction in the company tax rate for small businesses with an annual turnover of less than $2 million from 30 percent to 28.5 percent, federal treasurer Scott Morrison announced in the latest budget that the company tax rate for small construction companies would fall by a further 1 percent from 1 July 2016 to 27.5 percent.

The threshold for eligibility for the lower tax rate would also be extended from an annual turnover of $2 million to one of $10 million.

Meanwhile, the threshold for the 8 percent small business tax discount for unincorporated entities will also increase from $2 million to $10 million, as will that to qualify for access to the instant write-offs for equipment purchases of up to $20,000, which started last year and expires in 2017.

The move will benefit somewhere in the vicinity of 350,000 small businesses operating within the construction sector in Australia today.

According to ABS data, there are roughly around 345,483 construction businesses operating in Australia with a turnover of less than $2 million, including not just residential, commercial and civil construction but spread across specialist areas such as land development and subdivision, site preparation, concreting, bricklaying, roofing, steel erection, plumbing, electrical, heating and air-conditioning, fire and security alarm installation, building installation, plastering, carpentry, tiling, painting, glazing, landscape construction and construction equipment hire.

These businesses will obviously benefit from either the 1 percent reduction in the company tax rate.

In addition, a portion of the 20,975 businesses within the sector whose turnover exceeds $2 million will have a turnover of less than $10 million and will thus benefit from the increase in thresholds for the aforementioned tax breaks (the ABS does not indicate how many construction businesses have a turnover of between $2 million and $10 million).

Morrison said the importance of small business cannot be overstated.

“Small and medium businesses are driving jobs growth in Australia and must continue to do so,” he said.

“They are also overwhelmingly Australian owned and more likely to reinvest their earnings in future growth, as they seek to build their businesses.”

“A tax on their businesses is a tax on their enterprise and the jobs they provide.”

Aside from tax cuts, a strong level of capital investment was maintained, with the government spending around $50 billion over the six years to 2019/20 on public sector infrastructure.

Major initiatives in this budget include an allocation of $594 million in additional money to the Australian Rail Track Corporation to purchase land and continue preconstruction activities for the Melbourne to Brisbane Inland Rail Network.

Subject to matching funding, the government will also reallocate $1.5 billion in former East West Link funding for the Murray Basin Freight Rail network as well as upgrades to the Monash Freeway and the M80 Ring Road in Victoria.

Western Australia, meanwhile, will get $490 million for the Forrestfield Airport Link and an additional $261 million for the second section of the Perth Freight Link.

The government is also trying to bring the fiscal situation back into balance over the medium term – a measure which is expected to increase confidence and investment within the broader economy and thus help to underpin sound construction conditions over the longer term.

Whilst the budget deficit in 2016/17 will drop only from $39.9 billion to $37.1 billion, the deficit is expected to fall to $6 billion by 2019/20.

Master Builders Australia Chief Executive Officer Wilhelm Harnisch said tradespeople and builders were ‘the big winners’ in the budget, adding that the demonstrated path back toward fiscal balance would help promote the confidence needed for investment.

The Government has delivered on Master Builders calls for fiscal and industry policy settings that are targeted and realistic,” Harnisch said.

“It will boost confidence and should bring forward economic activity, investment, growth and jobs in the building industry,”