Businesses will now be able to access the $150,000 instant asset write-off scheme until New Year’s Eve, in a bid to help them rebound after coronavirus, according to a report from wire service AAP.
Treasurer Josh Frydenberg says the extension will cost $300 million and is expected to help about 3.5 million businesses.
“(They) will be able to go and purchase equipment or machinery, tools, up to a value of $150,000 – as many times as they want – and then write it off,” he told reporters.
“We’ve been through some difficult times, but the nation has made great progress.
“We’ve flattened the curve and people are getting back to work, and we want businesses to get back to doing what they do best – growing, innovating and hiring people across the economy.”
The instant asset write-off, which took effect in March, applies to businesses with annual turnovers of up to $500 million, up from $50 million. Assets can be new or second hand and must be used or installed by December 31.
Robert Vinci, Director of landscaping supply business, Ace Landscapes, in Sydney’s north, said the extension of the instant asset write-off is great news. Mr Vinci, who recently added three vehicles to his fleet that includes delivery trucks, vans, and backhoe loaders said, “This is excellent because my business relies on big-ticket machines that need to be updated on a regular basis.”
One-third of small businesses unaware of $150,000 tax break
Businesses can benefit from the instant asset write-off multiple times, yet research from OnDeck found 35% of SMEs say they are not familiar with the instant asset write-off.
Mr Oliver Wade, Head of Marketing & Partnerships, OnDeck Australia, said, “This write-off is available to 3.5 million Australian businesses. So, it is a concern that over one million enterprises could miss out on the opportunity to save on tax today while investing for tomorrow’s growth, because they are unaware of the write-off.”
Close to half (46%) of SMEs that are aware of the instant asset write-off say they are likely to take advantage of it. Close to half these SMEs (46%) plan to use the tax break to invest in IT equipment, vehicles (46%), manufacturing equipment and machinery (19%) and office furniture (15%).
Finance is required to access the asset write-off
Two out of five (41%) SMEs say an online small business loan would be helpful to take advantage of the instant asset write-off. Mr Wade said, “Preserving cashflow is always a priority for the SME community, so it makes sense for small businesses to use loan finance to fund business assets.”
Visit ondeck.com.au for information on the small business loans available through OnDeck.
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