10 May Small Business wins in 2017 Budget with $20,000 instant asset write-offs
The Australian – 12:00AM May 9, 2017 – view original article here
Image: Tery Wallace, at Boyd’s Garage and Tyre Service in Sydney’s Surry Hills, says ‘we need people to invest in small business’. Picture: Hollie Adams
Small business owners will win from policies that keep tax burdens lower for longer, as the Turnbull government uses today’s budget to satisfy a key constituency and build on its company tax cuts.
The government is planning a small-business blitz in coming days to sell a highly popular tax break that allows owners to claim an “instant” tax deduction on capital expenses worth up to $20,000.
While the “instant asset write-off” is due to expire on June 30, the government is tipped to extend the measure for at least one year in a move to encourage investment and jobs growth.
Scott Morrison told The Australian that people “instinctively” saw that a strong small business would mean conditions were better for workers and the broader economy.
“Small business can be assured that they’ll continue to have our support,” the Treasurer said.
Asked if the accelerated depreciation rules would be extended, Mr Morrison said “you’ll see”, but he acknowledged that small-business owners loved the tax break.
Small Business Minister Michael McCormack last week said he was “hopeful” the instant asset write-off would be extended and other members of the government have told The Australian that it was expected to be included in the budget.
Labor unveiled the tax break in 2012 to encourage small companies to invest in capital equipment ranging from machinery to vehicles, allowing them to deduct the full value of the capital item in the year after purchase rather than depreciating it over a number of years.
The Coalition extended the scheme in the May 2015 budget to allow small businesses with turnover of less than $2 million a year to get instant deductions for assets worth up to $20,000 provided they purchased the items before June 30, 2017.
Extending this by one year would cost at least $850m based on the earlier budget estimates.
The Council of Small Business Australia has been pressing for the change in talks with Mr McCormack.
“The last two budgets were good for small business and we expect this one will be no different,” said COSBOA chief Peter Strong. “We’re not expecting any big or unexpected announcements but certainly we expect the $20,000 instant tax write-off to be extended.”
Sydney mechanic Tery Wallace counts himself among the thousands of small-business owners who hope to fare better under Malcolm Turnbull’s budget policies. The 64-year-old, who is typically a Labor voter, purchased Boyd’s Garage and Tyre Service in Surry Hills in 1980 and over the years he has been both impressed and disappointed by government policies regarding small business.
Mr Wallace wants to see the instant asset write-off extended this year.
“We need all the help we can get in small business and that tax incentive was a great idea which should be continued,” Mr Wallace said.
“I would be a bit worried if it wasn’t continued to be honest because we need people to invest in small business.”
Mr Wallace has hired many apprentices over the years and believes the government could be doing more to incentivise young people to first enter and then remain in the industry.
“The government gives the business an incentive to bring kids into the trade but then doesn’t give the kids any reasons to stay,” Mr Wallace said.
“Under current laws the kids are made to pay a hell of a lot of money for TAFE courses to get into a business that traditionally doesn’t pay too well. I think that has to change.”
Companies with turnover of less than $10m a year are on track to get a cut in the company tax rate to 27.5c in the dollar under reforms legislated earlier this year.
The turnover threshold to qualify for the lower company tax rate will rise to $25m next year and $50m the year after.