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Australian Federal Budget 2019-2020: Small Business

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This analysis was written by King Tan and Sam Duncan

Instant Asset Write-off

The Government is increasing and expanding access to the instant asset write off. The changes benefit small businesses (those with aggregated annual turnover of less than $10 million) and medium sized business (those with aggregated annual turnover between $10 million and $50 million). There are two key changes, which apply from 7:30 pm (AEDT) on 2 April 2019 (Budget night) until 30 June 2020.

First, the instant asset write off threshold is increased from $25,000 to $30,000. The threshold applies on a per asset basis, meaning eligible businesses can instantly write off multiple assets. Small businesses will be able to immediately deduct purchases of eligible assets costing less than $30,000 that are first used, or installed ready for use, from Budget night to 30 June 2020.

Secondly, medium sized businesses will be able to immediately deduct purchases of eligible assets costing less than $30,000 that are first used, or installed ready for use, from Budget night to 30 June 2020. The purchase date is critical as the concession will apply to assets acquired by medium sized businesses (which did not previously have access to the instant asset write-off) after Budget night up to 30 June 2020.

Arrangements prior to Budget night

The Government has previously legislated a $20,000 instant asset write off for small businesses. Eligible small businesses can already immediately deduct purchases of eligible assets costing less than $20,000 that are first used or installed ready for use by 30 June 2019.

On 29 January 2019, the Government announced that it would increase the instant asset write off threshold for small businesses from $20,000 to $25,000 and extend the instant asset write off to 30 June 2020. These changes are contained in the Treasury Laws Amendment (Increasing the Instant Asset Write-Off for Small Business Entities) Bill 2019, which was introduced in the House of Representatives on 13 February 2019 and is still before the House of Representatives.

The changes in the Bill interact with the Budget changes. This means that, when legislated, small businesses will be able to immediately deduct purchases of eligible assets costing less than $25,000 that are first used or installed ready for use over the period from 29 January 2019 until Budget night. The changes announced in the Budget will then take effect (with access extended to medium sized businesses).


Luxury Car Tax

The Government has ignored calls to scrap the luxury car tax, instead announcing minor changes to the luxury car tax refund regime targeted towards providing further relief to farmers and tourism operators. For vehicles acquired on or after 1 July 2019, eligible primary producers and tourism operators will be able to apply for a refund of up to $10,000 on any luxury car tax paid, up from the current maximum refund of $3,000.

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