By Mark Bouris, The Sunday Telegraph
You’ve got to love a Federal Budget that arrives with an election looming, don’t you? There’s suddenly so much cash to splash, what with both major parties trying their absolute hardest to secure those last-minute votes.
But of all the big numbers you’ve heard thrown around over the past week, there’s one that matters more than most to this country’s small business owners. And that number is $30,000.
As in, the government has announced a commonsense increase for the instant asset write-off program for small businesses from $20,000 in 2018 to $30,000.
The increase might not sound like a lot (the government had earlier announced a $5000 increase in January), but the change will make a huge difference to millions of hardworking Australians, with around 3.4 million small businesses eligible for the deduction.
More importantly, it’s the kind of policy change that feels like it is actually designed to work in the real world — and how rare is that?
If you’ve never been in business, let me tell you exactly why this change matters. Let’s say you’re a builder, and it’s time to buy a new ute for work.
Under 2018 rules, your purchase had to be limited to $19,999.99 — and not a cent over — to qualify for the instant write-off.
So you’re shopping for a new ute that will carry not just you but your colleagues, maybe an apprentice, and a tray full of tools and equipment.
The cheapest four-door ute on the market in Australia right now is $21,990, so under 2018 rules, it wouldn’t have qualified.
And we’re not talking a luxury car here; this is the absolute cheapest possible way for you to get your job done, and yet it wouldn’t have qualified for a scheme pitched entirely at people just like you. It just didn’t make sense.
Another big change to the program is the increase in the turnover threshold, so businesses with sales of up to $50 million now qualify for the deduction, too, with the new rules in place until June 30, 2020.
Not to be outdone, it was suddenly over to Labor Shadow Treasurer Chris Bowen, who promised not only to make the instant asset write-off program permanent, rather than a year-by-year pledge, but has also been pushing his own party’s policy of allowing businesses of any size to write-off 20 per cent of the value in depreciable assets over $20,000 in the first year.