Powered by MOMENTUM MEDIA
Powered by MOMENTUM MEDIA
Subscribe to our newsletter SIGN UP
Labor’s investment guarantee to create 77,000 new jobs, says McKell Institute

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

Labor’s investment guarantee to create 77,000 new jobs, says McKell Institute

Around 77,000 new jobs and an increase to wages are likely to flow on from Labor’s proposed Australian Investment Guarantee, says one think tank.

Business Jotham Lian 07 May 2019
— 1 minute read

Labor’s policy, the Australian Investment Guarantee, will be a permanent feature which will allow businesses to immediately deduct 20 per cent of any new eligible asset worth more than $20,000.

Advertisement
Advertisement

Eligible assets would include tangible machinery, plant and equipment, and depreciating intangible assets for both upgrades of existing assets and purchases of new assets.

According to the McKell Institute, the Australian Investment Guarantee would reduce the effective tax rate on new investment to less than 26 per cent.

It used modelling done by the Minerals Council of Australia which showed that the Australian Investment Guarantee would reduce the marginal effective tax rate from 28.4 per cent to 25.9 per cent.

“The advantage of accelerated depreciation is that companies cannot benefit from the incentive unless they invest. Further, it rewards only new capital, as returns from existing capital investments remain taxed at the same rate. Accelerated depreciation can also encourage the adoption of new capital with the latest technologies and increased productive capacity,” it said.

Further, based on the US Tax Foundation’s methodology and results, the McKell Institute estimates that the Australian Investment Guarantee could increase employment by 50,000 to 77,000 jobs.

It also believes that the measures will increase Australian wages on average by up to $1,500 per annum.

“Unlike most investment allowances, which typically are temporary in nature, the Australian Investment Guarantee would be ongoing, providing a permanent lift in investment incorporating the most modern technologies,” the McKell Institute said.

The government recently raised the threshold for the instant asset write-off to $30,000 and expanded the eligibility to medium-sized businesses with a turnover of less than $50 million.

The instant asset write-off will only run till 30 June 2020, before reverting to $1,000 on 1 July 2020, with the concession to only be made available to small businesses and not medium-sized entities.

Labor’s Australian Investment Guarantee has been proposed to commence on 1 July 2021 and be a permanent feature in the tax system.

This email address is being protected from spambots. You need JavaScript enabled to view it.

Labor’s investment guarantee to create 77,000 new jobs, says McKell Institute
image intro
accountantsdaily logo
Business
FROM THE WEB