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The $20,000 instant asset write-off and small business energy benefits passed Parliament on Tuesday more than a year since being announced.
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Small business slams ‘absurd’ 11th-hour passage of tax breaks
27 June 2024
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The long-awaited passage of two key tax incentives this week has been criticised by small business advocates who say the delay has rendered the measures virtually useless for the current financial year.
On Tuesday, Parliament approved the Small Business Energy Incentive offering up to $20,000 in deductions for energy efficiency upgrades and an increase in the instant asset write-off threshold to $20,000 more than a year after their initial announcement.
Minister for Small Business Julie Collins said the passage of the bills demonstrated the government’s commitment to putting small business at the centre of its decision making.
“The Albanese Labor government is committed to delivering a better deal for small business and recognises the sector is the engine room of the Australian economy,” Minister Collins said.
“We’re focused on delivering responsible, practical assistance to small businesses so they can continue to invest and grow. The passage of legislation delivers on this.”
But with both measures set to expire at the end of the month, the Australian Small Business and Family Enterprise Ombudsman criticised Parliament for its “political squabbling” and failing to give small businesses certainty.
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“The small business community is cranky and exasperated about the incredibly slow way these measures have progressed,” ombudsman Bruce Billson said.
“It is not fine for political squabbling to run down the clock so there is no realistic prospect a small business can have certainty to provision for and spend this money with confidence the tax deduction is real.”
He said it was “absurd” to expect businesses to evaluate, purchase, and implement eligible investments by 30 June.
“The policy was designed to encourage small businesses to spend money it would otherwise not have spent, but a lack of certainty over the program may have deterred them.”
The instant asset write-off and small businesses energy incentive is part of the Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Bill 2023.
The bill was introduced to Parliament in September but was delayed due to disagreements between the House and Senate over small business instant asset write-off scheme provisions.
BDO tax partner Mark Molesworth said it was now “almost certainly too late” for the measures to have any meaningful impact on businesses.
“It is disappointing that yet again small businesses have been left in limbo – with literally only three business days left in the financial year – when a meaningful increase to the instant asset write-off should have been made a permanent feature of the system years ago,” he said.
Molesworth said the difficulty in getting the measure passed was emblematic of the dysfunctional way that Australia approaches setting tax parameters.
“While this is an important measure for small business, it is a relatively small concession in the context of Australia’s finances,” he said.
“It is to be hoped that lessons are learned from this, and the 2025 extension is passed expeditiously and, for preference before the new financial year begins.”
Billson also called for safeguards to prevent future delays, with the instant asset write-off resetting to $1,000 every year unless new legislation was passed to increase it.
“Laws with a time deadline should come with a minimum implementation period. We would suggest no less than six months from royal assent until the time a scheme ends.”
“Small businesses need to be able to trust Parliament to give them enough time to understand changes and with certainty factor them into their planning.”
However, the bill to extend the $20,000 instant asset write-off scheme until 30 June 2025 has already hit a snag since being introduced to Parliament earlier this month.
On Tuesday, the Senate Economics Legislation Committee tasked with examining the measure sought an extension until August to complete its report, originally due back Monday.
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