$20k instant asset write-off to get 1-year extension
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The amendment will hold off the threshold reverting to $1,000 until June 30 next year.
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Small businesses will be able to claim an immediate deduction for assets less than $20,000 under amendments to the Income Tax (Transitional Provisions) Act 1997 introduced to Parliament on Wednesday.
Nearly four million small businesses with an annual turnover under $10 million will be eligible under the scheme, which is estimated to cost the government $290 million over five years.
Treasurer Stephen Jones and Minister for Small Business Julie Collins said in a joint statement that the instant asset write-off scheme would encourage businesses to invest in more capital resources.
“The $20,000 instant asset write-off will help improve cash flow and reduce compliance costs, while the Small Business Energy Incentive will ease pressure on energy bills and help small businesses become more energy efficient,” they said.
“The $20,000 threshold will apply on a per asset basis, so small businesses can instantly write off multiple assets. This is targeted, responsible support, to help Australia’s small businesses continue to grow.”
“Small businesses are the engine room of Australia’s economy, which is why these new measures are so critical.”
The Tax Institute senior advocate Robyn Jacobson said she was pleased to see the temporary increase in the write-off threshold but said there would be “minimal revenue impact” due to the costs to the government.
Ms Jacobson added that the “constant tinkering” of the scheme has made it difficult for businesses to keep on top of current laws.
“While there may be concerns about the inflationary impact of allowing immediate deductions for the cost of certain depreciating assets, what is paramount in a good tax system is simplicity, certainty and efficiency,” she said.
She suggested introducing a permanent scheme for small to medium businesses with an annual turnover of less than $50 million and for assets costing less than $50,000.
“Annual changes increase the risk of errors and result in uncertainty, particularly when the measure will apply from 1 July 2023 this year and the amendments have not yet been legislated,” she said.
The scheme’s genesis can be traced back to a $1,000 deduction introduced by the Gillard government in 2012 and it has undergone a raft of changes in the last decade in response to changing economic conditions.
As part of the COVID-19 measures, the government scaled up the threshold to $150,000 and increased eligibility to encompass businesses with a turnover limit of less than $500 million.
The latest amendment, announced in the 2022–23 federal budget, will scale back the write-off and eligibility limits back to $20,000 for small businesses only.
Ms Jacobson said that “while this will feel like a reduction of what was available throughout the pandemic until 30 June 2023 under the temporary full expensing measure, people should be aware that it’s actually an increase as the write-off threshold would have otherwise reverted to $1,000 from 1 July 2023 without this measure”.
The change was part of a broader array of measures introduced for small businesses on Wednesday.
The bill will also create a 20 per cent deduction for businesses that make less than $50 million annually buying equipment that supports electrification or efficient energy use this financial year.
“The new small business energy incentive builds on the Albanese government’s measures to help small businesses become more energy efficient and ease pressure on their energy bills,” Mr Jones and Ms Collins said.
Christine Chen 15 September 2023 accountantsdaily.com.au
Louise is a CPA with a Masters in Professional Accounting and a diploma of Financial Planning. Louise has been in Public Practice for 21 years and has been the principal of LMC since 2012. With a focus on small business support services and self-managed super funds, Louise is passionate about helping small businesses achieve their potential through good cashflow management and strategies for success. Louise and her family enjoy the space and tranquility of the Noosa hinterland with a small acreage block complete with dogs, chickens, geese, ducks and donkeys!
Lesley Joyce
Lesley is our individual taxation specialist and has over 23 years experience in preparing individual and small business returns. Lesley loves country music and line dancing and having recently relocated closer to the coast, enjoys a walk along the beach. Lesley is a proud Nana to her 14 grandchildren.
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Suzanne is our Client Service Coordinator. She has worked in accounting practices for 20+ years and has expert knowledge in all things relating to Corporate Compliance. She is an active local community volunteer. In her leisure time she enjoys wandering in ancient places and reading biographies.
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Kristie has recently joined LMC Financial Group in Office Administration and Reception. She has run her own interior design small business for 20 years and when she is not at LMC she continues to work with clients on the Sunshine Coast. Our new office space has been designed by Kristie and Louise and brings a fresh warm approach to accounting in Cooroy.
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Kelly has qualifications in accounting and bookkeeping and has over 20 years’ experience in these areas. Kelly is a local to the beautiful sunshine coast and town of Cooroy and is ready to help with all your accounting and bookkeeping needs, nothing is too difficult. Kelly loves spending time with her family and everything the Sunshine Coast offers, we do really live in paradise.
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