Businesses earning up to $500 million per year will have an extra six months to write off newly purchased assets worth up to $150,000, the Treasurer told Sky News on Tuesday.
The government announced in March it is injecting $700 million to increase the instant asset write-off from $30,000 to $150,000, also expanding access to the scheme by lifting the cap on aggregated annual turnover to $500 million from a previous $50 million.
At the time, the expanded measure was due to end on 30 June 2020, sparking calls from business groups for its extension.
But Treasurer Josh Frydenberg has now confirmed the scheme will run until the end of the year, in a bid to spur economic growth.
“What we want to do now, at a time when people are getting back to work and maybe demand is a bit slower than it was pre-crisis, is to encourage businesses to go out and to grow and to invest and to hire, and this is one of the measures to do just that,” Mr Frydenberg told Sky News.
The Treasurer also confirmed that the take-up of the instant asset write-off measure has been “strong”.
“Hundreds of thousands of businesses have used this program in the past,” Mr Frydenberg said.
“Extending it to the end of this calendar year will be seen as a very welcome move by businesses right across the country.”
Addressing the issue of tight cash flow across the business sector, the Treasurer said that while the situation is “tough”, businesses need to be planning ahead.
“Businesses are not just looking at today, they’re looking at tomorrow and they’re looking at the restrictions being eased and people getting back to work and their normal lives,” he said.
“This initiative has a view of the future and it’s encouraging businesses to take that next step, to buy the equipment or tools that they need and to help to help us become more productive as a nation.”
Late last week, the small business ombudsman reiterated calls for the instant asset write-off limit of $150,000 to be made permanent.
“Small businesses need certainty to be able to plan to buy major equipment. The government’s recent instant asset write-off threshold increase to $150,000 is welcome, but most small businesses are currently focused on their survival,” the ombudsman said at the time.
“Our plan recommends this temporary policy be made permanent. This would significantly reduce the need for depreciation and cut red tape.”