Treasurer Wayne Swan will announce on Tuesday several budget measures that will help small Australian businesses cope with the impact of the strong currency and consumer caution. Among the measures that Mr Swan will announce is a loss carry-back provision which would allow local firms to claw back overpaid cost of tax in any financial year.

The provision, similar to measures enforced by Canada, U.S. and Britain, will have a maximum amount of $300,000 per company or 30 per cent of the tax rate they can claim back tax paid for up to $1 million losses.

"It'll mean businesses can use their tax losses now, when they need to, rather than in the future when their businesses are performing better," The Sydney Morning Herald quoted Assistant Treasurer David Bradbury.

About 110,000 small Australian companies are expected to benefit from the measures, which would cost the government $700 million over the next four years. However, the cost is not included in the financial year 2012-13 which is the target date for the Gillard government to return to a surplus in the national budget since claims for that year will be paid in 2013-14.

By July, small businesses would also be allowed to immediately deduct the cost of any new assets less than $6,500 for as many assets the firms purchase. They could also deduct the first $5,000 of a new or used vehicle purchased.

The proposal is a recommendation from the Business Tax Working Group to help small companies address the challenges of a two-speed economy.

Because of these sweeteners, there are doubts if Mr Swan could find up to $6 billion budget savings to achieve the budget surplus that the Gillard government has promised next financial year. Chris Richardson of Deloitte Access Economics said the Tuesday budget should have more cuts or an average savings of $10 billion over two years which the federal government has not achieved since 1996.

Other sweeteners offered by the government include allocation to treat 400,000 people on the waiting list of public dentists and assistance to dentists to relocate to rural and remote areas.

However, ANZ Bank Chief Executive Mike Smith cautioned the government against coming up with many surprises on the budget because such unexpected developments affect the level of business confidence on the national economy. Mr Smith said he agreed that it would be a good target for the government to have a budget surplus, but business would also require a stable environment to grow. He cited the requirement even for strong Australian banks to have twice the amount of capital from pre-global financial crisis level based on tougher regulations caused by European banks.

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