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The Treasurer says the budget will prioritise boosting private sector investment to "fund and finance the future".
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Chalmers confirms business tax incentives in budget
13 May 2024
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Treasurer Jim Chalmers says he wants much more investment from the private sector and has confirmed that Tuesday’s budget will feature business tax incentives as a means of achieving it.
Chalmers said he wanted to prioritise attracting and incentivising private investment because it was essential for “the future of our economy and in the Future Made in Australia”.
“Investment has been really strong under this Labor government, but we’re not complacent about it, because we need more investment to fund and finance the future,” he said in a joint press conference with Finance Minister Katy Gallagher on Friday.
“There will be public investment in the Budget, but there will be an even bigger emphasis on getting that private capital flowing … the tax system has got a role to play there in incentivising that investment and that private capital. And that’s one of the levers that we are prepared to pull, and you’ll see more of that on Tuesday.”
The flagged tax incentives would be financed through spending restraint in other areas of the budget, with $27.9 billion in savings and reprioritisations in the budget across all portfolios, according to Minister Gallagher.
But when asked about specifics on measures to stimulate business investment, Chalmers said businesses would have to “wait and see” on Tuesday.
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“You’ll have to wait and see. But we have indicated a willingness to use the tax system to incentivise the kind of private investment that we need in the future of our economy,” he said.
Tax experts like BDO partner Mark Molesworth have called on the government to introduce tax deductions that would encourage businesses to invest in purchasing new equipment, increasing productivity.
Molesworth told Accountants Daily the budget should incorporate additional tax deductions instead of simply bringing forward deductions from future years to the current year.
“Accelerated deductions, like an asset-write-off scheme, are not going to incentivise a business to invest in something it otherwise wouldn’t,” he said.
“For example, former Treasurer Wayne Swan introduced a measure during the GFC where businesses received an additional 30 per cent deduction for the new equipment they bought … it's a bit like the research and development tax incentive with additional deductions or benefits in addition to the deductions that you would have got anyway.”
CA ANZ has also recommended a continuation of the instant asset write-off scheme to support small businesses and reduce red tape by aligning regulatory reporting systems.
“We need to make it easier for businesses to be in business,” it said.
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