A super-sized tax break that made it easier for tradies to claw back the price of a brand new ute has been axed.
The Albanese government has unveiled plans to overhaul the popular instant asset write-off scheme, decreasing the amount businesses can claim for new equipment down to $20,000.
It will also be restricted to businesses with an annual turnover of less than $10m.
The popular measure was beefed up under a Morrison-government era stimulus measure in the back half of the Covid-19 pandemic’s first wave.
It allowed businesses with a turnover of under $5bn to write off assets under an unlimited threshold.
A popular instant asset write-off scheme has been scrapped in this year’s budget. Picture: NCA NewsWire / Nikki Short
It was a boost of a previous stimulus measure – which upped the asset threshold to $150,000 and business turnover of under $500m – to try and get struggling businesses back in the game.
The measure was due to expire on June 30 and the government elected to not renew it.
The change will make it more difficult for small businesses, such as tradies, to fast-track their cash flow, forcing them claim the depreciation of the asset instead.
But small businesses with a turnover of under $10m will be able to instantly write off as many assets under the $20,000 threshold, as long as it is “first used” or “installed ready for use” after July 1.
If the measure is not agreed to when it is put to parliament before July 1, the previous threshold of $1,000 will apply.
It’s expected the change will see a run on businesses rushing to purchase assets, such as cars, ovens, tools – basically anything that can depreciate in value – before it comes to an end.
The budget forecasts the new threshold will provide around $290m in cash flow support over the forward estimates.