Instant asset write-off: Is it rewarding overseas manufacturing?
WHILE small businesses across the country await a decision from Federal Parliament deciding whether they can write off assets up to $20,000, Kennedy MP Bob Katter and a leading North Queensland accountant are questioning why the measures do not go further to truly support primary producers and Australian industry.
In last year’s Federal Budget, the Labor Government promised an instant asset tax write-off of $20,000 for businesses with an annual turnover of up to $10m, allowing them to deduct up to that amount for eligible assets between 1 July 2023 and 30 June 2024. The initiative has been “stuck” in parliament with the Senate pushing to increase the threshold to $30,000, leaving just one month to pass legislation before the end of the financial year.
Mr Katter said small businesses, most of which were operating on tight budgets due to high interest rates, electricity prices and insurance, among other costs, deserved some certainty towards their end-of-year tax planning.
“It would be an act of sincerity for the government to put this legislation through in the next week of sitting and enable small businesses to get some benefit,” Mr Katter said.
“And believe me, this Labor Government is badly in need to be seen to do something good, immediate and practical to help the battlers out there.”
Mr Katter said while the government had been claiming to address market share of large corporations with recent inquiries and anti-merger laws, failing to provide basic relief towards small community businesses would only exacerbate the demise of private, individual operators in Australia.
“In every area of the economy we are seeing a concentration of market power. While a sophisticated corporation will have 20 or 30 people working on tax minimisation, and owner-operator has nothing.
“But the continuing concentration of market power, whether it’s in hardware stores, whether it’s in food, whatever the area, what we’re ending up with is monopolies and oligopolies.”
He said while each year the write-off incentives included targeted expenses such as energy or technology, he questioned why it couldn’t be expanded to include “the maintenance of assets” rather than just the purchase of assets.
“If you allow deductions for the maintenance, that maintenance is being worked on by most likely a local, Australian business, or at least the employees of that business are local residents, injecting money back into the Australian economy.
“Instead, $20,000 doesn’t allow for too many Australian-made assets, because we hardly have any.
“So is this really encouraging the purchase of overseas-manufactured assets?”
North Queensland accounting firm Carey Group partner Robert Carey said he represented a wide demographic of taxpayers throughout the region, with a significant representation of the primary industries sector.
He said $20,000 did not go far for primary producers and offered them little choice but to slowly depreciate assets instead.
“There really aren’t too many assets primary producer buy valued less than $20,000 that they question a write-off about. They either need those lesser valued items or they don’t,” Mr Carey said.
“Because it only applies to one asset, up to $20,000. You can’t buy something for $100,000 and claim $20,000 from it.
“We’ve seen in years past caps on this initiative of $1m or $100,000. Whatever it is, that’s where we need to be – a larger cap that allows primary producers, which are also small businesses to buy assets of value.
“If I’m a grazier and I want to buy a big truck, an asset I’m holding onto for 12,15 years, a large cap gives me a real choice. I can write it off instantly or depreciate each year. But it gives them a choice and that drives the investment.”
