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Asset write-off for SMEs upped to $25,000, says PM Morrison

The Australian government today announced it is increasing the instant asset write-off for small businesses from $20,000 to $25,000 today 29 January 2019. until 30 June 2020.

Small businesses with annual turnover less than $10 million will be able to immediately deduct purchases of eligible assets, said an announcement from the offices of Prime Minister Scott Morrison.

The $25,000 instant asset write-off will improve cash flow by bringing forward tax deductions, providing a boost to small business activity and encouraging more small businesses to reinvest in their operations and replace or upgrade their assets, said the announcement.

Key facts and figures

  • Across Australia, there are over 3 million small businesses with an annual turnover of less than $10 million that are eligible to access the $25,000 instant asset write-off. These small businesses employ around 5.7 million employees.
  • This measure is estimated to have a cost to revenue of $750 million over the forward estimates period.
  • The Government will look to legislate the change in February

Other support:

  • The Government is supporting small and medium businesses by fast tracking tax relief. New laws passed by the Parliament on 18 October 2018 bring forward tax cuts for small and medium businesses by five years. This is part of Government’s plan for a stronger economy and more jobs.
    • The company tax rate for active small and medium business with turnover below $50 million is being cut from 27.5 per cent to 26 per cent in 2020‑21 and to 25 per cent in 2021-22.
    • The already legislated increase in the unincorporated small business tax discount rate (which applies for unincorporated small businesses with an aggregated turnover below $5 million) will rise from 8 per cent to 13 per cent in 2020-21 and to 16 per cent in 2021-22 and subsequent years (up to the existing cap of $1,000).
  • The Government has also lifted the small business entity turnover threshold from $2 million to $10 million, extending access to a range of small business tax concessions including:
    • simplified trading stock rules, giving businesses the option to avoid an end of year stocktake if the value of stock has changed by less than $5,000;
    • a simplified method of paying PAYG instalments calculated by the ATO, which removes the risk of over or under estimating PAYG instalments and the penalties that may be applied; and
    • the option to account for GST on a cash basis and pay GST instalments as calculated by the ATO.