The federal Treasurer has extended the $150,000 instant asset write-off scheme by six months to help businesses buy new and second-hand assets that can help improve cash flow.
Earlier this year, the federal government announced that it was increasing the instant asset write-off threshold from $30,000 to $150,000 and expanding access to include businesses with an aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020. The boost write-off formed part of the government's first “targeted” $17.6 billion stimulus package designed to “keep Australians in jobs, keep businesses in business and support households”, in light of the growing impact of the coronavirus (COVID-19) on the domestic economy.
Federal Treasurer Josh Frydenberg has now revealed that the scheme will be extended until the end of the calendar year 2020.
Speaking on Sky News, Mr Frydenberg said: “Extending it to, to the end of this calendar year will be seen as a very welcome move by businesses right across the country For a number of businesses, it is very tough, but businesses are not just looking at today, they're looking at tomorrow. And they're looking at the restrictions being eased, people are getting back to work and getting back to their normal lives and economic activity [going back to] as it was.
“So... this initiative has a view to the future and it's encouraging businesses to take that next step to buy the equipment or the tools that they need, and to help them grow and help us to become more productive as a nation as well."
Mr Frydenberg explained that businesses can use the instant asset write off multiple times for goods that are purchased up to $150,000, which are then written off their tax bill.
“So, of course, it's a great benefit for businesses because they may be put off a purchase for some time because normally they would need to depreciate it over a number of years, but now that they can do it all in year one.
“It makes it a lot more tax effective for these businesses to go out and get that equipment and that will help the economic activities of this economy.”
When asked why the government was extending the scheme, the Treasurer said that while take-up had been “very strong”, he noted that business growth had slowed due to COVID-19.
He said: “What we want to do now, at a time when people are getting back to work and maybe demand is a bit slower than it was pre-crisis, is to encourage businesses to go out and to grow and to invest and to hire and this is one of the measures to do just that.”
Your Choice Mortgage Brokers Pty Ltd ATF Halo Innovation Trust trading as Heart Mortgage Services - Australian Credit Licence 38643
The information contained herein is of a general nature only and does not constitute advice. You should not act on any information without considering your personal needs, circumstances and objectives. We recommend you obtain professional financial advice specific to your circumstances. The views expressed here are not ours. While the information contained in this article may contain or be based on information obtained from sources believed to be reliable, it may not have been independently verified. Where information contained in this publication contains material provided directly by third parties it is given in good faith and has been derived from sources believed to be accurate at its issue date. To the maximum extent permitted by law: no guarantee, representation or warranty is given that any information or advice in this publication is complete, accurate, up to date or fit for any purpose; and no party or associated entities as mentioned is in any way liable to you (including for negligence) in respect of any reliance upon such information. This article may also contain links to websites operated by third parties who are not related to us. These links are provided for convenience only and do not represent any endorsement or approval by us.