The extended $20,000 instant asset-write off is being used as an increasing number of SMEs boost their cash flow, data from the Australian Tax Office reveals.
According to the ATO, the average amount claimed through the instant asset write-off more than doubled in the 2015-16 financial year.
Minister for Small Business Michael McCormack said that up to 300,000 small businesses took advantage of the $20,000 instant asset write-off in 2015-16, helping to improve cash flow for business owners.
“In 2015-16, the number of claims increased by 50,550 and the average amount claimed increased by $4,065 to $9,000,” Mr McCormack said.
“This means more money in the pockets of small businesses so they can grow their businesses, employ workers and pay them more.
“The instant asset write-off is directly helping small business’ bottom lines and improving cash flow for small business, which means more investment in local communities, higher wages and more local job opportunities.”
However, this comes despite critics have said the conditions of claiming the deduction are overly complex and are confusing as many business owners as it helps.
The instant asset write-off threshold increased to $20,000 in 2015, and was extended to 30 June 2018 earlier this year.
Small businesses with an annual turnover of less than $10 million can access the concession, up from $2 million in previous years.
“Small business is a major contributor to our economy and employs almost half of our workforce. Creating the right conditions for the sector to thrive will create local jobs, build communities and continue to grow the economy,” said Mr McCormack.
“Cash flow is so important for small business operators and the instant asset write-off means that tradies can invest in better tools, cafes and restaurants can upgrade their equipment, and all small businesses can reinvest to grow their business.
“These great results are set to continue with tens of thousands more small businesses able to access the instant asset write-off thanks to the government’s increase in the small business turnover threshold to $10 million per year.”
Mr McCormack has yet to indicate if the instant asset write-off will be further extended despite calls from small business owners to make the concession permanent.
MYOB chief executive Tim Reed said its latest Business Monitor Survey of over 1,000 SME owners found that keeping the instant asset tax write-off was top of mind for them.
“SMEs have consistently called for the government’s $20,000 instant asset tax write-off to be made permanent, and support for this measure continues to grow in our latest survey,” Mr Reed said.
“As such a vital contributor to our economy, it’s important that the government listens to the concerns of small businesses owners and provides policies which enable them to be successful.”
Find full details of the asset write-off and eligibility rules here.
Jotham Lian is the news editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals. With a focus on breaking news and exclusive analysis, Jotham keeps Accountants Daily readers up to date with company moves, tax updates and essential business and client strategy.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including The Sydney Morning Herald and Channel NewsAsia.
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