Instant asset write-off scheme extended.
Until December 31 businesses will be able to claim accelerated depreciation on new assets under the latest extension to the $150,000 instant asset write-off program.
After expanding the program from assets worth $30,000 to $150,000 in response to the COVID-19 pandemic in March, the federal government has now extended the deadline for making claims from July 1 to December 31.
Treasurer Josh Frydenberg said the extension is expected to cost taxpayers $300 million over the next four years. However, uptake of the scheme is uncertain because it is demand-driven and requires firms to first buy assets out of their own pockets. “We’ve seen strong take up of this program in the past,” Frydenberg told Sunrise on Tuesday 9th June when the extension was announced.
The instant asset write-off scheme allows businesses to immediately deduct the value of an asset in the year of purchase, instead of claiming deductions over several years. Businesses can claim multiple assets.
The program was initially launched in 2015 and has been reinforced half a dozen times since with the size of the write-off currently more than six times higher than the original $20,000. While the write-off has been a pillar of the federal government’s small business policy in recent years, there have been longstanding questions about its usage across the sector.
Several surveys suggest most firms don’t have the capital to make use of the program, while tax office figures in 2016-17 revealed fewer than 350,00 businesses claimed something, despite predictions millions of firms would benefit. The average amount claimed over that time was just $11,000 of the then $20,000-cap, according to the ATO.
To date the Treasurer has provided no further figures about usage of the write-off scheme since the coronavirus extension was put in place in March, although this data is likely to come through with tax returns due to be filed over the coming months.
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