Federal Budget: 20k instant asset tax write-off extended

- May 9, 2018 2 MIN READ

Australia’s small businesses may see some relief this financial year with Treasurer Scott Morrison announcing the extension of the $20,000 instant asset write-off in the 2018-19 Federal Budget. The write-off was slated to end this financial year, however, it has now been extended until June 30, 2019.

The instant asset write-off allows businesses to claim up to $20k in a single transaction on business equipment. The $20k write-off can be claimed multiple times.

Industry pundits suggest the extension of the instant asset write-off was not the only bonus for small business in Morrison’s announcements.

“Many small businesses are unincorporated entities (sole traders, partnerships, trustees) and they will be beneficiaries of a lower PAYG tax burden,” says the Institute of Public Accountants CEO, Andrew Conway.

“The boost in infrastructure spending will also provide indirect benefits to the small business community.”

Conway suggests small businesses have been recipients of favourable tax concessions in the Budget over the past few years, from the lower corporate tax rate to the increase of the small business turnover threshold to the $20K instant asset write-off.

“The tax discount for unincorporated entities was a signature policy of the Institute which took a long time to get over the line,” said Conway.

“Tax concessions are important in reducing the regressive compliance costs on small businesses.”

Speaking of the instant asset write-off, Sam Allert, Managing Director ANZ from Australian cloud accounting provider Reckon suggested any tax relief for small business was welcome.

“The $20,000 instant asset write-off is evidently a worthwhile incentive, so it’s promising to see the government extended the initiative. As a next step, it should ideally be enshrined in permanency,” Allert said.

“According to our survey of 1,000 small business owners, 91 per cent say they’d like the government to extend the instant tax write-off beyond 30 June 2018. However, over one in three (39 per cent) respondents have yet to utilise the incentive, indicating the potential need to better educate Australian small businesses on what they can and cannot write off.”

CPA Australia Head of Policy, Paul Drum FCPA shared Allert’s view that the instant asset write-off should be made a permanent policy.

“It would be preferable that this measure be made a permanent feature of the tax system to help small businesses with their planning,” Drum said.

In measures that will also impact some SMBs, the Government announced a number of integrity measures including changes to circular trust arrangements, and a ‘clarification’ of unpaid present entitlement under Division 7A.

In the context of the government’s response to the black economy taskforce review, measures such as new compliance obligations for certain businesses are being introduced.

The taxable payment reporting system will be expanded to include security and investigation services, road freight transport and computer design and related services, and a new $10,000 cash payment limit will be introduced that will apply to business payments.

Compliance costs are also set to impact on small business owners.

“The compliance cost on small business is already a major concern and this is set to increase with the extension of single touch payroll to all employers. We look forward working with the Government to make inroads in reducing the regulatory burden on SB,“ said the IPA’s CEO.




Small Business Guide to Tax Time with Mark Chapman