Budget 2017: Michael McCormack ‘hopeful’ $20,000 instant asset write-off scheme will be extended
Friday, May 5, 2017/
Small Business Minister Michael McCormack says he is ‘hopeful’ that small and medium businesses will continue to be able to use the government’s $20,000 instant asset write-off scheme into the next financial year.
Speaking to The Weekly Times, McCormack said he’s asked Treasurer Scott Morrison to use next week’s federal budget to extend the accelerated depreciation measure that was first introduced in 2015.
The scheme allows small businesses to immediately deduct the full value of income-producing assets purchased to the value of $20,000, instead of claiming the deductions over a number of years.
It was initially made available to businesses turning over up to $2 million annually but that threshold was extended to $10 million when the Senate approved the first phase of the federal government’s company tax cut plans in March.
Prior to the introduction of the scheme, small businesses could immediately write-off assets worth up to $1000.
The scheme is due to expire on June 30 this year and the Minister has previously said he would like to see it extended for at least another 12 months.
“I’ve spoken to the Treasurer. He knows how good the program is, he knows how successful it is,” McCormack told The Weekly Times.
“We know cashflow is king in any small business – it (the asset write-off) has worked for them and put money back in their pockets, which they nearly always then reinvest into their businesses.”
McCormack told SmartCompany next week’s budget will build on existing government policies, but did not specify which ones.
“I am working with the Treasurer to deliver another good budget for small business that builds on the incentives and tax cuts we have already delivered to grow the economy, strengthen local communities and create local jobs,” he says.
Peter Strong, chief executive of the Council of Small Business of Australia, says the program “has got to be extended”.
“It would be very strange to not have it extended, especially with all the advertising the government is currently running about supporting small business.”
Strong is hoping to see the measure extended for multiple years, rather than 12 months, or for it to be made a permanent.
Meanwhile, Strong is hoping next week’s budget will see the government commit to addressing the challenges faced by SMEs when it comes to late payments.
It’s an opportunity for the government to lead by example, he says, perhaps by committing to paying its suppliers and contractors in a timely manner or inserting clauses into government contracts with big businesses that would encourage them to pay on time.
“That would be terrific,” he says.
Strong expects to the budget contain measures to further the government’s small business support services and will be watching closely for what the government plans to do to address problems in the employment and training services sector.
“It’s not delivering for small business at all and it is something they can fix without spending any money,” he says.
*This article was updated at 2.04pm on May 5, 2017.