Govt announces instant asset write-off extension
The Federal Government has announced it will extend the $150,000 instant asset write-off (IAWO) for six months, to 31 December, 2020.
Australian businesses with annual turnover of less than $500 million would be able to utilise the extended timeframe to invest in assets to support their business as the economy reopens and COVID-19 restrictions are eased.
It would also improve cash flow for businesses by bringing forward tax deductions for eligible expenditure.
The threshold applied on a per asset basis and businesses could immediately write-off multiple assets, if it costs less than $150,000.
Treasurer Josh Frydenberg said the extension would also give businesses additional time to acquire and install assets.
“Assets can be new or second hand and could include for example a truck for a delivery business or a tractor for a farming business,” Frydenberg said.
“Legislative changes will be made to give effect to this measure, which is estimated to have a cost to revenue of $300 million over the forward estimates period.”
Robyn Jacobson, senior advocate at The Tax Institute, said the measure addressed its joint submission on extending IAWO.
The joint submission was also signed by Chartered Accountants Australia and New Zealand, Corporate Tax Association, CPA Australia, Institute of Public Accountants and Law Council of Australia.
“This measure will be the fifth amendment to extend the IAWO since 2015. We would support further changes to the IAWO to make it a permanent feature of the tax system beyond 31 December 2020, by allowing businesses with an aggregated turnover of less than $50 million to access an ongoing immediate write-off for assets costing less than $30,000 being the pre-COVID-19 cap,” Jacobson said.
“This would bring efficiencies to the tax system by relieving businesses of the need to depreciate an asset’s cost over its effective life and provide a deduction that mirrors the outlay of cash flow, as well as remove the need for annual amendments to the tax law to reflect what is clearly government support for an instant asset-write off.”
Recommended for you
Government has introduced a bill to Parliament to legislate the first stream of the QAR reforms.
ASIC now has a 1:1 ratio when it comes to court success in the enforcement of crypto activities and more action is expected as Treasury seeks to introduce a regulatory framework.
A leading governance body has hit out at “specialist interest groups proposing ad hoc law reform” when it comes to reforms of financial services legislation and believes an independent body is needed.
The release of ALRC’s final report into financial services legislation has highlighted financial advice as a “significant” focus as it seeks to reduce costs and help advisers understand their obligations, alongside the Quality of Advice Review.
