The usefulness of the $20,000 instant asset write-off for SMEs has been openly criticised by a business executive, as further evidence that it may be phased out on 1 July as is currently planned.
Director of tax communications at H&R Block and former senior director at the ATO, Mark Chapman, previously told My Business he believes the $20,000 threshold will be dumped in the upcoming federal budget, however it may not revert to its original $1,000 limit.
Speaking to My Business’ sister publication Accountants Daily, David Boyar of Sequel CFO claimed the instant asset write-off is simply “a gadget benefit” and “very overrated” in its actual benefits to businesses.
“It’s great for retailers. I don’t know how good it is for small business,” he said.
“If you spend $20,000 cash now, you get tax deductions – so 30 per cent of that now instead of over three or four years. Most businesses, unless they plan for it, don’t have that cash flow to go with that, and just blow on fixed assets.”
Instead, Mr Boyar suggested the pain points of PAYG and superannuation payments would be a much better focus for the government in the budget.
“Why not allow pre-approved funding for tax payments while businesses are growing? Why not give them a hiatus on some of the payments that they need to make while the business is growing?” Mr Boyar said.
“Because that’s what actually causes them to fail, not a lack of fancy new computers.”
Mr Boyar’s views are, however, at odds with those of the Institute of Public Accountants (IPA), which previously told My Business that the measure had been “very well received” and should be retained or, at least, should not revert to the $1,000 threshold.