THE Institute of Public Accountants (IPA) has welcomed the Government’s decision to extend the $20,000 instant asset write-off for small businesses for the next 12 months.
The definition of small business has gone from a turnover of $2 million to $10 million effective from 1 July 2016 so these entities will also benefit from the initiative.
“The IPA has long advocated for the write-off initiative and we are relieved that common sense has prevailed to extend the time period,” said IPA chief executive officer, Andrew Conway.
“If the decision had been to revert the limit to $1,000, it would have been a huge disincentive for many small businesses.
“The increase in the accelerated depreciation write-off threshold to $20,000 has been of great assistance to small business cash flow.
“This initiative is bringing forward the tax deduction that would have been deductible over a number of years.
“The reversion to $1,000 would have had a negative impact on the broader economy as the incentive for small businesses to reinvest in their future would be taken away; restricting potential growth, employment and prosperity.
“A higher instant asset write-off should be a permanent feature of our tax system going forward. The Henry Review into Australia’s tax system recommended that a higher threshold should apply.
“Small businesses Australia-wide should be very pleased with this outcome; it brings an injection of economic growth, giving small businesses the confidence to buy new equipment, reinvest in their operations and grow,” said Mr Conway.