Instant asset write-off scheme extended to big business, Josh Frydenberg announces
A coronavirus stimulus measure aimed at small and medium-sized businesses has now been extended to the top end of town, in what the Federal Government says is a move to help boost investment and create jobs.
Treasurer Josh Frydenberg said the Government would allow companies with more than $5 billion in turnover to instantly deduct the cost of new capital investments.
The instant asset write-off — a centrepiece of the October Budget — was initially aimed at 3.5 million small businesses.
In its original form, businesses making up to $500 million per year were able to write off newly purchased assets worth up to $150,000.
Now, companies that make less than $5 billion in Australia will be eligible to apply, no matter how much money they make globally.
That means that while companies like Coca-Cola Amatil will be eligible, mining giants such as BHP won’t be.
The hope is that businesses will revise their capital expenditure plans and fast-track projects, in turn boosting employment.
Mr Frydenberg said the Government would introduce legislation to expand access “to drive more investment, create more jobs and further support our economic recovery from COVID-19”.
“Full expensing temporarily allows businesses with aggregated turnover of less than $5 billion to deduct the full cost of eligible depreciable assets of any value in the year they are first used or installed,” he said.
Scheme expected to have high take-up, but rorters warned
Hundreds of thousands of businesses took up a similar program introduced under then-Labor prime minster Kevin Rudd during the global financial crisis.
The scheme is expected to be popular again this time around, but its success won’t be known until after businesses file their tax returns.
The Australian Taxation Office (ATO) has already warned businesses to not pretend to be loss-making to claim this and other stimulus measures including the popular JobKeeper wage subsidy.
The Government first announced it would expand the instant asset write-off scheme in March, in the early stages of the coronavirus pandemic.
The scheme, which was already in place for some businesses, changed from allowing those making $50 million per year to write off purchases up to $30,000, to allowing those making $500 million per year to deduct purchases worth up to $150,000.
Then, in the October Budget, Mr Frydenberg said the scheme, which had been due to end on July 1, would remain in place until the end of the year.
He said at the time about 3.5 million businesses would be able to benefit from the scheme.
Today’s announcement, which follows lobbying from the Business Council of Australia and Corporate Tax Association, now opens it up to about 50 more companies, employing more than 150,000 Australians.
To satisfy the new test, companies must have less than $5 billion in total statutory and ordinary income (excluding non-assessable non-exempt income) in either the 2018-19 or 2019-20 income year.
And they must invest more than $100 million in tangible depreciating assets in the period 2016-17 to 2018-19.
The Government will also allow businesses to opt out of temporary full expensing and the backing business investment incentive on an asset by asset basis.
“This change will provide businesses with more flexibility in respect of these measures, removing a potential disincentive for them to take advantage of these incentives,” Mr Frydenberg said.