30 January 2019

The Institute of Public Accountants (IPA) has commended the Government’s announcement to not only extend the instant asset write-off for small business but also the increase in the limit from $20,000 to $25,000.

“The IPA advocated for the introduction of this initiative and have continued to argue the case for the instant asset write-off to become a permanent feature of the small business tax regime and not just a ‘maybe’ come Federal Budget time each year,” said IPA chief executive officer, Andrew Conway.

“The extension of this initiative through to 2020 will give reassurance to small businesses looking to invest in their business for future growth.

“In 2018, the Australian Small Business and Family Enterprise Ombudsman’s (ASBFEO) recommended to substantially increase the current $20,000 instant asset write-off to $100,000 and we support any increase of the threshold.

“When it comes to small business, cash-flow is king and ensuring this policy is instilled into the system provides some certainty.

“If small businesses can invest in their business, whether it be plant and equipment, vehicles or technology or anything else to make them more productive, that has a direct, positive impact on the economy, including the propensity to expand and employee more people.

“Many small businesses still misconstrue the original incentive behind the asset write-off, interpreting it as $20,000 in tax relief. It is imperative that small business owners obtain advice from their trusted adviser; their public accountant before undertaking any capital investment.

“If a small business thinks it is tax relief, they are mistaken. This measure merely allows them to accelerate the write-off of the purchases and assets that helps with cash flow, but they must remember it’s still coming out of their pockets. Regardless of the threshold amount, they have to have access to the funds,” said Mr Conway.