Extended asset write-off provision a boon for SME capex
(30 January 2019 - Australia) The Australian government has extended the accelerated depreciation provision for another year following several months of cabinet consideration.
Prime Minister Scott Morrison announced the A$20,000 write-off will continue until the end of the 2019/20 financial year instead of concluding in the current 2018/19 financial year. The scheme allows enterprises with less than A$10 million in annual turnover to write-off new or replacement plant and equipment worth less than A$20,000 in their tax return for that year. The provision has been expanded to cover assets up to A$25,000 however many SMEs have pushed for the government to make the scheme permanent.
According to the Australian Tax Office (ATO), less than 350,000 businesses claimed assets under the program in the 2016/17 financial year and American Express survey data indicated 47 percent of SMEs haven’t heard about the scheme. The average amount claimed was A$11,000 in 2016/17. Accountants lamented small business owners lack of awareness while the Council of Small Business Australia (COSBOA) and Australian Chamber of Commerce and Industry have been actively campaigning to make the write-off permanent for almost a year.
"SMEs across the country will welcome today's announcement by the Prime Minister of the planned extension for the 2019-20 year of instant asset write-off arrangements for Australian SMEs and a raising of the threshold from $20,000 to $25,000 from today. The extension of the arrangements and the new threshold will allow small businesses to claim immediate deductions for asset purchases up to the value of A$25,000 for assets purchased between now and the end of June 2019 with a similar immediate deduction available for the 2019-20 year. The measure provides a significant cash flow reward for SMEs who are investing and growing their businesses and it simplifies their tax and record keeping paperwork” Ai Group CEO Innes Willox stated.
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