The accounting profession has welcomed the news that the government will extend the $20,000 instant asset write-off for another year, but urges the government to make it permanent.
Instant asset write-off extension falls short
Ahead of the budget, both MYOB and Reckon found that extending the $20,000 instant asset write-off, which was due to expire on 30 June 2017, was one of the key things small businesses were lobbying for.
The federal government delivered on this point, with the budget including a measure to extend the $20,000 immediate deductibility threshold for a further 12 months to 30 June 2018.
The write-off will also now apply to businesses with an annual turnover of $10 million, as opposed to the previous threshold of $2 million, after the definition of small business was redefined in the recently introduced company tax rate legislation.
BDO national tax director Lance Cunningham told Accountants Daily that the instant asset write-off extension was one of few positives to come from the budget for small Australian businesses.
“Not a lot in there for business I’m afraid, it’s not what you’d call a business budget,” Mr Cunningham said.
“I suppose there’s something there for small business in relation to the $20,000 write-off extension, and also because of the increase in the threshold for what’s a small business increasing to $10 million turnover, it means more people will be entitled to that than in the past.”
The extension should be considered “a win for small business” according to HLB Mann Judd tax partner Peter Bembrick. However, Mr Bembrick told Accountants Daily that it’s disappointing there was no indication as to what will happen beyond 30 June 2018.
MYOB CEO Tim Reed also said that while the extension was a welcome move for small businesses, he urged the government to go one step further next year and make it permanent.
“It encourages business growth and is exactly the type of measure that delivers confidence to the business community,” Mr Reed said. “Making the $20,000 instant tax write-off permanent for new assets is a key priority for SMEs.”
The Institute of Public Accountants (IPA) is also advocating for the write-off to become a permanent fixture.
“The IPA has long advocated for the write-off initiative and we are relieved that common sense has prevailed to extend the time period,” said Andrew Conway, IPA chief executive.
“Small businesses Australia-wide should be very pleased with this outcome; it brings an injection of economic growth, giving small businesses the confidence to buy new equipment, reinvest in their operations and grow,” said Mr Conway.
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