Stop fiddling round the edges: Make the $20,000 instant asset write-off permanent
Since 2015, federal governments have offered an instant asset write-off to SMEs. It is about time the budget measure is made permanent.
Back in 2015, the Coalition government used its budget to reveal what we now know of as the instant asset write-off (or temporary full expensing to use the technical term).
It was the second federal budget I reported on for SmartCompany and it was a genuine rabbit-out-of-a-hat moment that surprised, and delighted, many members of the small business community.
In the days that followed, we were treated to numerous photo ops with ministers standing proudly next to a small business owner who was going to invest in a new coffee machine for their cafe, or a new piece of machinery. It was, of course, the year of ‘Tony’s tradies’.
The measure — which initially allowed businesses to immediately write off the full value of a purchase up to $20,000 rather than claim deductions over its lifetime — was well received by the sector, and while the data showed the take-up was not overwhelming in the years that followed, it helped create a sense of confidence among business owners who wanted to, and could, invest in growing their business.
In nearly every year since, the asset write-off has been extended, expanded, and some may say, kept around to keep small businesses happy.
Today’s budget will be my 11th for SmartCompany and the reports are again suggesting we will see another 12 months added to the lifetime of the measure (which admittedly received a massive upgrade last in 2020).
But if this government, like the ones before it, has seen value in continuing the write-off for multiple years, why not make it permanent?
Why not give the small business community the certainty of knowing that as they grapple with a challenging economic environment and persistent inflation, they will be able to fully deduct new purchases to help relieve the pressure?
Why keep giving the small business sector temporary, piecemeal changes, instead of substantial and meaningful change?
Maybe the answer is the election is looming. But to my mind, that is a pretty good reason to make this budget measure (and others) permanent. To borrow a much-used catchphrase, is now not the time to ensure the small business economy “engine” has the best shot at continuing to run?
Prime Minister Anthony Albanese said in April his government plans to put small business “front and centre”. It should show us how.
This is an updated version of an article that was first published in March 2022.
To see SmartCompany‘s full budget coverage, click here.
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