IPA warns of confusion over $20k asset write-off
The Federal Government's $20,000 asset write-off for small businesses is a "win-win-win" proposition, according to the Institute of Public Accountants (IPA).
IPA chief executive, Andrew Conway, said the Budget measure would be "a great assistance to small business cash-flow", but noted "there appears to be some confusion in the market place" as to how the measure will work.
"Simply put, if a small business makes a profit of $50,000, the tax payable at the new company tax rate would be $14,250," Conway said.
"The deduction of business related assets up to $20,000 would reduce the taxable profit to $30,000 with a tax payable amount of $8550; a tax saving of $5700.
"For a non-incorporated small business the tax saving will be dependent on the individual's marginal tax rate."
"This initiative will have major flow on effects for the broader economy. The retail sector should be very happy..
"More cash to invest in the economy makes this initiative a win-win-win proposition."
CPA Australia chief executive, Alex Malley, also backed the measure, which he said would enable small businesses to "create jobs and invest in Australia's future".
"We should be doing everything we can to encourage today's small businesses to grow into tomorrow's big businesses, with all the new jobs and spending which that brings," he said.
"By allowing small businesses to immediately deduct assets costing less than $20,000 is a positive move which will support vital and much needed business investment."
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