The Federal Government will extend its asset write off scheme for a further year, allowing bulk businesses to invest into new equipment.
It is part of the Australian Government’s plan to provide small and medium businesses with more than $16 billion in tax cuts by 2023-24.
The extension will allow business experiencing COVID‑19 related supply disruptions, or considering investing in projects requiring longer planning times, to take advantage of the incentives.
The Federal Budget found that in the December quarter, investment in machinery and equipment increased at the fastest quarterly rate in nearly seven years as firms took advantage of the Government’s tax incentives.
The move is expected to boost activity and employment in the short run and raise the productive capacity of the economy for the future.
- Bulk businesses able to fully write off new assets
- Asset write-offs accelerates automation
- Instant asset write-off scheme extended
The tax rate for small and medium companies will also be reduced from 30 per cent in 2014-15 to 25 per cent from 1 July 2021.
Combined, the extension of these measures is expected to deliver an additional $20.7 billion in tax relief to businesses over the forward estimates period. An estimated $320 billion worth of investment is expected to be supported by these incentives.
The temporary full expensing and temporary loss carry-back measures are estimated to boost GDP by around $2.5 billion in 2020‑21, $7.5 billion in 2021‑22, and $8 billion in 2022‑23, and create around 60,000 jobs by the end of 2022‑23.
Treasurer Josh Frydenberg said in his budget speech that a sustainable recovery requires a strong private sector.
“Over 99 per cent of businesses, employing over 11 million workers, can write off the full value of any eligible asset they purchase,” he said.
“This has seen their spending on machinery and equipment increase at the fastest rate in nearly 7 years.
“Announcing the extension of these measures for a further year until 30 June 2023, so a tradie can buy a new ute, a farmer a new harvester and a manufacturer expand their production line.”