Instant asset write-off slashed

The latest Federal budget that was delivered earlier this week spelt the end of the Temporary full expensing measure that was introduced over two years ago, leaving business owners until June 30 of this year to take advantage of the generous incentive.

From July 1, 2023, the asset threshold eligible for instant write-off has been reduced right down to $20,000, and only businesses with a turnover of less than $10 million are eligible.

Previously, the Temporary full expensing scheme allows businesses with an annual turnover of up to $5 billion to immediately write off the full cost of new assets purchased for business purposes, with no limit applied on the value or number of assets.

This can be anything ranging from a ute worth $50,000 right up to a combine harvester worth $500,000.

The new $20,000 threshold applies on a per asset basis, which means eligible businesses can instantly write off multiple assets.

Any asset worth $20,000 and over can still be deducted albeit not immediately but over several years at 15 per cent in the first year of using them and at 30 per cent each year after that.

Once the updated incentive ends on June 30, 2024, and is not renewed, the threshold may fall to just $1000.

The proposed measure is yet to pass Parliament.

The new measure has left industry organisations disappointed, who were unified in asking for an extension of the generous tax incentive for at least another couple of years.

“It’s disappointing the incentive falls far short of the previous uncapped Instant Asset Write-Off which gave farm businesses far more reach to increase productivity,” said the National Farmers Federation.

While disappointing, the decision to pull back significantly on the measure that was introduced in the midst of the COVID-19 pandemic to encourage spending was hardly surprising as the country currently faces one of its highest inflation rates in decades.