THE NEWS WRAP: Government unveils new tax break for small businesses

Treasurer Wayne Swan has announced his big small business initiative for Tuesday evening’s Federal Budget, unveiling a $5,000 tax write off for motor vehicle purchases.

The new measure will replace the existing entrepreneur’s tax offset, which was considered by many in the small business community to be overly complex.

But entrepreneurs will have a wait before they can access the new tax break – it won’t come into effect until July 2012.

“These change will make tax simpler and increase cashflows so small business will be able to reinvest in their operations and grow,” Swan said yesterday.

Australian dollar could hit $US1.70

A leading currency expert has predicted the Australian dollar could hit $US1.30 in 2013 and $1.70 by 2014 due to strong commodity prices, the weak US dollar and Australia’s relatively high interest rates relative to the rest of the world.

Savvas Savouri from Britain’s Toscafund hedge fund, told The Australian that the relentless hunger for commodities in China and India would keep commodity prices high, underpinning the strength of the Australian currency.

He also expects the US dollar will slide as China moves out of the Greenback and into alternative currencies.

Grocery giants’ house brands strategy working

Coles and Woolworths attempts to get consumers to shift more of their grocery spending to house brands appears to be paying off, with the share of consumer baskets taken by house brands rising from 23.7% to 24.7% over the last 12 months.

However, the sharp discounts made on house brand products – such as milk and other dairy products – appears to be having an impact on the sheer dollars being spent – the average spend on house brands fell from $208.03 in the December quarter to $202.24 in the March quarter.

House brands typically generate better margins than big-named brands, but the big discounts being made by the grocery giants suggests margins are being eroded.

The markets

Australian stocks are tipped to rise this morning after a Wall Street rose on Friday on the back of promising US employment data.

But while the Dow Jones industrial average gained 54.64 points, or 0.4% to 12,638.81 on Friday night, the market was down 1.3% for the week and commentators remain concerned about commodity prices, which are tipped to continue falling this week.