‘The practical reform we’ve been advocating for’: CA ANZ, CPA welcome IAWO changes

Under the plan, businesses with annual turnover below $10 million will be able to continue immediately deducting the full cost of eligible depreciating assets costing less than $20,000, rather than seeing the cap fall back to $1,000 from 1 July as previously scheduled (which has required the government to re-legislate the extension each year).

The $20,000 limit will apply on a per‑asset basis, meaning multiple purchases of equipment, vehicles, tools or technology – including new and second‑hand items – can each be claimed in full at the end of the financial year.

In outlining the changes ahead of today’s (Tuesday, 12 May) budget, Treasurer Chalmers said the measure was designed to cut compliance costs and underpin investment by smaller firms.

“We’ll save small businesses thousands of dollars by making the instant asset permanent in the Budget on Tuesday,” Chalmers said.

“This means small businesses will be able to immediately deduct every piece of new equipment worth up to $20,000, from new tech to tools to machinery.”

A key part of the pitch was the claim that simpler depreciation rules would reduce time spent dealing with the tax system.

“This will help save small businesses 376,000 hours a year in compliance, cutting red tape and getting costs down in our economy," Chalmers said.

The announcement comes after consecutive short‑term extensions of the scheme, which have shaped asset‑purchase decisions since the pandemic.

Both CA ANZ and CPA have welcomed the move.

CPA Australia business investment lead Gavan Ord described the decision as “a critical step toward giving small businesses the certainty they have long been calling for.”

“For too long, small businesses have had to contend with year-to-year extensions and shifting thresholds, making it difficult to plan and invest with confidence.”

“Locking in a permanent setting changes that.”

CA ANZ identified the measure’s impact on reducing compliance complexity and improving cash flow as central to small business investment in equipment and technology that support productivity, with Australian tax, superannuation and financial services leader Susan Franks describing the decision as a significant step forward for small business policy design.

“For years, short-term, year-to-year thresholds have created confusion for businesses and advisers, undermining investment planning and adding unnecessary complexity,” Franks added.

“Locking in a stable, long-term setting is exactly the kind of practical reform we’ve been advocating for, as it cuts red tape, supports confidence and lets businesses focus on running and growing their operations, not second-guessing the next Budget.”

Ord explained how SMEs will depend on such measures during a time of increasing costs and tight margins, adding: “This is a practical reform that will help businesses invest in their future, whether that’s upgrading technology, improving efficiency or expanding operations.”

While the policy signals a continued investment in Australian small businesses, Ord encouraged sustained focus on the country’s tax and regulatory settings.

“This is exactly the kind of policy that can help lift business confidence and support economic growth - but it must be part of a broader, stable framework that encourages long-term investment.”

CA ANZ noted the value of stable, durable tax settings that provide clarity and foster economic resilience.

Franks said: “It’s a simple, effective measure that supports growth and strengthens the economic foundations Australia needs in a challenging global environment.”