Thousands of small and medium businesses will receive tax breaks on purchases of new equipment, as the government seeks to bolster investment in the economy’s ‘‘engine room’’. In a budget that also highlighted future tax cuts for small businesses, Treasurer Josh Frydenberg expanded the instant asset write-off, so that it can now be claimed by medium businesses with turnover up to $50 million a year, up from a previous $10 million limit.
The threshold for the tax perk — which allows enterprises to write off assets against their taxable income — is also being lifted, from $25,000 per asset to $30,000. The government said the changes, projected to cost the budget $400 million over four years, would mean an extra 22,000 businesses being able to claim the tax break. Mr Frydenberg said the write-off could be claimed every time a business bought an eligible asset worth less than $30,000, such as when a plumber bought new tools, or a cafe owner bought a fridge. Under one case study presented by the government, a hypothetical nursery employing five people would be able to write off the purchase of
two vans under the scheme, instead of depreciating the assets. As a result, the business would save on tax and improve its cash flow by $13,500. As a result of the changes, the government says 3.4 million small and medium businesses will now be eligible for the tax perk.
Budget documents also highlighted that the corporate tax rate for companies with annual turnover of less than $50 million will fall from 27.5 per cent this year, to 26 per cent in 2020-12, and 25 per cent in 2021-22. Businesses are also being offered larger cash payments for taking on apprentices where there are skills shortage, the centrepiece of a $525 million skills package, but the budget had a tougher message for some larger businesses, such as banks and multinational corporations.
Source: The Age, 3 April 2019