Instant Asset Write-Off Surge Ahead of Cut-Off – ScotPac
(1 February 2024 – Australia) The latest ScotPac SME Growth Index reveals 2 in 3 Australian SMEs took advantage of the Instant Asset Write-Off Scheme before it was capped.
At the end of the last financial year before the revised limit of A$20,000 per asset recently took effect, SMEs rapidly increased their use of the pandemic era uncapped instant asset write-off (IAWO) scheme before it was limited Inside Small Business reports.
Round 19 of the SME Growth Index, based on direct interviews with 722 SMEs across Australia with A$1-20 million turnover and running continuously for the last decade, noted that the average IAWO scheme in FY23 was Q$91,500.
SMEs with declining or flat growth took advantage of the scheme the most actively with 68 percent purchasing eligible assets relative to 59 percent of growth SMEs.
“There is no doubt the Instant Asset Write-off Scheme has achieved its objective of encouraging SMEs to invest in assets to help grow their business. In raw numbers, hundreds of thousands of SMEs were able to claim tax relief worth billions of dollars for assets purchased in 2023-24. When you consider the rising costs faced by all businesses in that period, including the cost of critical assets, the Instant Asset Write-off scheme has provided a great boost for SMEs” commented ScotPac CEO Jon Sutton.
“While the temporary full expensing measure has ceased, the current scheme still provides incentives for SMEs to invest in capital. Average capital expenditure levels for SMEs are continuing to grow. Many SMEs are using Asset Finance and other working capital solutions as leverage to purchase new equipment and take advantage of the tax concessions still on offer. While recent changes to the scheme have removed the immediate tax benefit for larger items, the A$20,000 per asset cap still provides opportunities for SMEs looking to expand or upgrade their asset base” Sutton added.
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