Instant Asset Write-Off Extended, Threshold Increased up to $25,000

Australia’s Prime Minister Scott Morrison recently announced that the instant asset write-off would be extended to June 30 next year and that the threshold would be increased to $25,000. These changes took effect from January 29, according to the Australian Taxation Office.

“This will enable over three million small businesses across the country with an annual turnover of less than $10 million to access the new $25,000 instant asset write-off from now until June 30, 2020,” the Department of Jobs and Small Business said in a statement.

Government Support and Potential Benefits

“The increase and extension of this initiative will further improve cash flow for hard-working Australian small business owners by bringing forward tax deductions, providing a boost to small business activity and encouraging more small businesses to reinvest in their operations, and replace or upgrade their assets,” Senator Michaelia Cash, Minister for Small and Family Business, Skills and Vocational Education, said.

Minister Cash added that the government first introduced the $20,000 instant asset write-off in the 2015-2016 budget. In the first year alone, more than 300,000 small businesses took advantage of this opportunity, equating to an average of approximately 800 businesses per day making an investment through this initiative.

“The Liberal National Government understands that when business owners are able to keep more of their own money, they are able to invest back into the business, boost productivity, grow the economy and create new jobs,” she said.

Related Policies

The increase and extension of the instant asset write-off will be financially helpful for small and medium sized businesses, including the approximately seven million Australians they employ.

Some of the government’s relevant policies include tax relief for incorporated small and medium businesses with turnovers of less than $50 million per annum, as well as an increase to the rate of the tax discount for unincorporated small businesses with turnovers below $5 million.

Views From Business Experts

The public and private sectors are likely to give positive feedback on the government’s policies.

“This is good news for small businesses looking to purchase a new or second-hand asset, such as a vehicle, printer or generator,” Kate Carnell, the Australian Small Business and Family Enterprise Ombudsman, said. “The scheme allows small businesses to immediately deduct assets costing less than $25,000 instead of claiming deductions over a number of years, and there is no limit on how many assets can be claimed.”

James Pearson, head of the Australian Chamber of Commerce and Industry, said the move would further stimulate small business investment, but reiterated calls to make the measure permanent.

“Making the instant asset write-off permanent will encourage longer-term investment planning by small businesses and will support continuous and sustainable business growth. Although an extension to 2020 is not a commitment for the measure to be permanent, it is a good start,” he told My Business.

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