MORE than a million small businesses will get relief on their tax bills in the new year to help cope with the economic slump.

The Federal Government will cut the December quarter tax instalment for small businesses by 20 per cent. Most businesses pay the instalment in February.

The announcement comes today as more danger signs emerge, with unemployment edging up for a second successive month and with China suffering a slump in exports and imports ó a development one analyst described as a disaster for Australia.

About 1.3 million Australian businesses with an annual turnover of $2 million or less will qualify for the tax relief.

The goverment†says†the move†will provide immediate and much-needed cash flow relief to small businesses and encourage small business confidence.

If a business’s income ultimately justifies higher tax than is paid, the business will have to make up the unpaid amount later. But it will have had advantage of the cash until then.

The decision is worth $440 million ó the cost of bringing forward into this financial year the expected lower revenue collection for 2009-10.

Australians are being warned to prepare for higher unemployment after 15,600 lost their jobs in November ó 3600 in Victoria.

Although the November downturn is only the third monthly downturn this year, the trend rate of job growth has fallen to its slowest since the commodities boom began.

Employment Minister Julia Gillard has warned that worse is to come. “The Government has always said that Australia won’t be immune from the global financial crisis and it will affect our lives here including jobs here,”.

Unemployment has edged up from a 3.9 per cent low in February to 4.3 per cent in October and 4.4 per cent last month.

Bank economists are forecasting almost no growth in jobs in the year ahead, and a 6.4 per cent unemployment rate by 2010. Investment bank JP Morgan is tipping 9 per cent by 2010.

ABN Amro economist Kieran Davies said the unemployment dam was about to break.

“Retail sales have been basically flat all year, building approvals are falling in a hole, business confidence has plummeted, and hiring intentions have fallen off a cliff,” he said.

China has revealed that its exports and imports have dived, with imports sliding 18 per cent over the year, the worst result in almost two decades.

TD Securities global strategist Stephen Koukoulas said a year of weakness from China would spell almost certain disaster for Australia.

article excerpts SMH