In a surprise pre-election pitch to small business, the government has proposed another boost to the instant asset write-off which would increase the threshold and give medium-sized firms access to the scheme.
Unveiled on Tuesday, Treasurer Josh Frydenberg pitched the revised program as the big SME sweetener in the 2019-20 federal budget.
The headline threshold for the instant asset write-off would increase from $25,000 to $30,000 while the eligibility criteria would be expanded from businesses with less than $10 million in annual revenue to those with less than $50 million.
Businesses will be able to claim the write-off every time an asset under the cap is purchased through to the June 30, 2020 cut-off.
This extension would make about 22,000 additional businesses eligible for the program, Frydenberg said on Tuesday night.
“Already more than 250,000 businesses have taken up the instant asset write-off, and now, even more will have the chance to do so,” Frydenberg said in his budget speech.
In opting to pitch an enhancement of the write-off, the government has again baulked at calls to make the scheme permanent, announcing no further extension past the previously announced June 30, 2020 cut-off.
In January the government announced an extension to the write-off which saw the headline threshold increase from $20,000 to $25,000, although it is yet to lock this in with legislation.
If legislated, businesses can claim assets “first used or installed ready to use” between January 29 to budget night under the $25,000 cap and then claim assets under the $30,000 cap from budget night to June 30 2020.
Medium-sized businesses would only be able to claim eligible assets from 7.30pm today until the 2020 cut-off.
The government says the $30,000 cap would save SMEs, and therefore cost taxpayers, $700 million through to 2020-21 before delivering $300 million in extra revenue over the next two financial years due to a boost in “business activity and investment”.
A further extension to the write-off will please small-business advocates, but recently there has been criticism the government isn’t doing enough to promote awareness and accessibility of the program.
Further, over the short history of the scheme, ATO data indicates small businesses claim closer to $10,000 on average under the scheme, somewhat muting benefits associated with raising the cap.
Small business Minister Michaelia Cash has previously told SmartCompany she would like to see communication of the scheme improve through the creation of a one-stop-shop web resource.
The budget contained no measures for the creation of any such resource.
Cash clarified on Wednesday morning that measures to introduce a one-stop shop measure for SMEs to access better information are underway as part of measures detailed in last year’s budget.
An announcement is expected in the coming months.
This article was updated at 4:10PM AEDT March 4.
You can help us (and help yourself)
Small and medium businesses and startups have never needed credible, independent journalism and information more than now.
That’s our job at SmartCompany: to keep you informed with the news, interviews and analysis you need to manage your way through this unprecedented crisis.
Now, there’s a way you can help us keep doing this: by becoming a SmartCompany supporter.
Even a small contribution will help us to keep doing the journalism that keeps Australia’s entrepreneurs informed.