Tax

Small business Ombudsman Kate Carnell calls on government to increase instant asset write-off to $100,000

Dominic Powell /

instant asset write off

Source: AAP Image/Mick Tsikas

Australia’s Small Business and Family Enterprise Ombudsman Kate Carnell has called on the government to up the instant asset write-off from $20,000 to $100,000 in a move that would be a boon to sectors such as farming and manufacturing.

Facing the House of Representatives Standing Committee on Economics for the inquiry into impediments to business investment in Australia this morning, Carnell raised a number of issues around factors holding back business investment in Australia.

This included the currently skyrocketing energy prices, the ongoing issues with supplier payments times from small business and government, and the unintended effect of wider business legislation on small business owners and operators, such as the requirement for paid parental leave to be taken in a single continuous period, which is unfeasible for many female SME owners.

Speaking to SmartCompany, Carnell says while the current $20,000 instant asset write-off is suitable for everyday small businesses with lower expenses and no major pieces of equipment to purchase, businesses in industries such as farming, manufacturing and retail often have costs that exceed the threshold.

“At the moment you can claim $20,000 as often as you like for individual assets in the 12-month period, but if the asset costs over that you have to depreciate it, which is just more red tape,” she says.

“What we suggest is that you can have $20,000 as often as you like, and then you can claim $100,000 once or twice for things like a ute, tractors or machinery for your small manufacturer.”

Not only would this reduce red tape and paperwork for local SMEs, this would also up a business’ capacity to invest in themselves says Carnell, reducing their tax liabilities and increasing the cash on hand to put back into the business.

Council of Small Business Organisations Australia chairman Peter Strong supports Carnell’s move, calling it “very practical and logical”.

“Farming, manufacturing, fitting out a new restaurant — those things can cost far more than the $20,000 limit,” he says.

Strong also believes an increase in the threshold would increase the number of imports by local small businesses, providing a flow-on effect for local suppliers.

Government still reluctant to make write-off permanent

Carnell says she doesn’t know if the government would support the move to a $100,000 write-off every three years but believes they “get it” would have a positive effect on encouraging SMEs to invest.

“It would be a big step in the right direction, and wouldn’t cost the government that much at all,” she says.

“I’d like the government or the opposition to announce it and then quickly entrench it in legislation so businesses can plan around it, as that’s what’s required if you’re going to have a major investment in your business.”

The Coalition government has so far refused to permanently integrate the $20,000 instant asset write-off, instead extending it for 12 months at a time in each budget since its introduction in 2015.

Labor has previously shown support for extending the tax scheme, and recently rolled out its own policy to help businesses investing over $20,000, promising an immediate 20% on any asset that exceeds the amount.

The Greens have also thrown their hat in the ring for the integration of a permanent instant asset write-off, while also attempting to push through legislation in June which would increase the threshold to $30,000 when the assets relate to renewable energy or energy efficiency.

NOW READ: ATO warns small businesses it will come knocking in 2018, after netting $1.8 million from random Melbourne audits

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Dominic Powell

Dominic is the features and profiles editor at SmartCompany.

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