Small business owners once again have access to immediate deductions on their asset purchases, after the extension to the $20,000 threshold was finally passed by parliament.
The measure has been in place for several years, but rather than being a permanent fixture of the tax landscape, has been extended a year at a time in the federal budget.
As previously outlined, this year proved problematic as the extension – along with a raft of other legislation, including corporate tax cuts – failed to pass through parliament before the new financial year began.
That meant that the $20,000 write-off automatically dropped back to its original $1,000 level from 1 July, potentially catching businesses off guard.
However, the extension to 30 June 2019 was formally granted on Wednesday (12 September), meaning it is once again available for businesses with annual turnover of up to $10 million.
It enables eligible businesses to receive a full deduction for each asset purchased, below $20,000 in value, in the current financial year, rather than having to depreciate it over multiple years.
The passage of the required legislation through parliament was broadly welcomed by the business community, although there were repeated calls to end the uncertainty and make the measure permanent.
“It’s particularly positive that the bill got such broad support in both the House and the Senate,” said James Pearson, head of the Australian Chamber of Commerce and Industry (ACCI).
“[But] the write-down should be made permanent. We call on the government to end the annual uncertainty associated with renewing the write-down and to do the right thing to support business by making it permanent.
“Businesses need certainty and policies that will support their ability to grow, hire and invest.”
Similarly, the Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, welcomed the reintroduction of the $20,000 threshold, suggesting it empowers businesses to “buy the equipment they need to grow and prosper”.
She repeated her calls for the threshold to be increased in the longer term, though, noting that $20,000 is overly restrictive.
“For capital-intensive businesses, $20,000 is too low. For example, if you’re a farmer and you want to buy an asset like a tractor, you’re not going to get one for anywhere near the $20,000 threshold,” Ms Carnell said.
“We will still continue to push for embedding the instant asset write-off in legislation and raising the threshold to at least $100,000.”
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.