logo
Receive the latest mybusiness news
SUBSCRIBE TO OUR NEWSLETTER
Copyright © 2020 MOMENTUMMEDIA

$26.7bn ‘instant expensing’ declared ‘biggest budget win’ for small business

Maja Garaca Djurdjevic
Maja Garaca Djurdjevic
07 October 2020 1 minute readShare

In what has been declared the biggest win to come from this year’s budget, businesses can now write off the full value of assets acquired after Tuesday night and first used by mid-2022.

On Tuesday evening, Treasurer Josh Frydenberg announced a number of business-backing measures, but one that has attracted the most praise is temporary full expensing, worth $26.7 billion.

The Treasurer referred to the measure as a “game changer”, noting that it will cover 3.5 million businesses, helping them unlock investment, dramatically expand their productive capacity and create tens of thousands of jobs.

Advertisement
Advertisement

Under the rules, over 99 per cent of businesses will be able to write off the full value of any eligible asset they purchase for their business.

More specifically, from 7.30pm (AEDT) on 6 October 2020 until 30 June 2022, businesses with turnover up to $5 billion will be able to deduct the full cost of eligible depreciable assets of any value in the year they are installed.

 

For small and medium-sized businesses with aggregated annual turnover of less than $50 million, full expensing also applies to second-hand assets.

“Building on the successful expansion of the instant asset write-off during the COVID crisis, tonight we go further, announcing the largest set of investment incentives any Australian government has ever provided,” Mr Frydenberg said.

“A trucking company will be able to upgrade its fleet, a farmer will be able to purchase a new harvester and a food manufacturing business will be able to expand its production line.

“This will boost the order books of the nation. Small businesses will buy, sell, deliver, install and service these purchases.”

SPONSORED CONTENT

 

Small businesses with aggregated annual turnover of less than $10 million can deduct the balance of their simplified depreciation pool at the end of the income year while full expensing applies.

The provisions which prevent small businesses from re-entering the simplified depreciation regime for five years if they opt out will continue to be suspended.

This measure is estimated to decrease receipts by $26.7 billion over the forward estimates period and $3.2 billion over the medium term.

Reacting to the budget, Kate Carnell, the Australian Small Business and Family Enterprise Ombudsman, applauded the Treasurer’s announcement.

“This gives small businesses time and certainty to plan to buy major equipment,” Ms Carnell said.

“It also significantly reduces the need for depreciation and cuts red tape.”

$26.7bn ‘instant expensing’ declared ‘biggest budget win’ for small business
mybusiness logo
Maja Garaca Djurdjevic
Maja Garaca Djurdjevic

Maja Garaca Djurdjevic is the editor of My Business. 

Maja has a decade-long career in journalism across finance, business and politics. Now a well-versed reporter in the SME and accounting arena, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies and enabling citizens to influence decision-making.

You can email Maja on [email protected] 

Leave a Comment

Latest poll

How satisfied are you with the SME measures in the federal budget?