The federal government has committed to extending the $20,000 instant asset write-off for a further 12 months to 30 June 2019, but calls to make it permanent have fallen on deaf ears.
$20K asset write-off extension falls short
Institute of Public Accountants general manager of technical policy, Tony Greco, told Accountants Daily that he’s very pleased about the extension, and that it is very good news for small business.
However, he had reservations about the write-off being extended only for a further 12 months until 30 June 2019, saying he “would ideally like it to be a permanent feature”.
“That's something even the Henry review recommended – a $10,000 instant asset write-off as a permanent feature of our tax system,” he said.
“Whilst we're supportive of the extension, we would rather it be a permanent feature of the tax system.”
However, Mr Greco said that the certainty works both ways, noting that for the foreseeable future, clients don’t have to go out and accelerate their asset purchases.
Further if clients want a quicker return, he suggests claiming closer to year-end is the optimal time from a cash flow perspective.
“You effectively incur the expenditure before the end of the financial year and it forms part of the next year's tax return, whereas if they wait until the new financial year, they're going to have to wait until they lodge their return,” Mr Greco said.
“We always remind clients that it's most advantageous for tax reasons to do it just prior to the end of the year if you can wait. That something where they've got some discretionary ability to play with.
“If they needed a replacement because the business can't survive without it, it becomes academic to do it at that point, but when you do have a choice, getting it done as close to the end of the financial year is obviously beneficial.”