The new financial year is fast approaching, and while some aspects of our Federal Government’s 2023-24 Budget, including energy bill relief, were welcome – there’s a lot in there that falls short.
One thing that jumps out is the dramatic cut to the Instant Asset Write-Off scheme. And I reckon tradies and dealers alike will really feel this one.
The initiative was introduced to help businesses claim an immediate tax deduction for the full cost of qualifying depreciating assets.
From 1 July, both the total cost claimable and the number of businesses eligible for the (very popular) program will reduce. The amount a small business can claim for a piece of new equipment will change from $150,000 to $20,000.
That is quite a drop. And the amount wasn’t the only aspect scaled back. Let’s talk eligibility.
At the moment, businesses with a turnover of up to $500 million are eligible, and write-offs are available for both new and used vehicles.
The Albanese Government has changed things up so 3.8 million small businesses with an annual turnover of less than $10 million will be eligible.
These adjustments essentially make it impossible for businesses to instantly claim the cost of a new commercial vehicle as a tax deduction.
Why slam the brakes on initiatives that encourage people to get out there, drive their business forward and put money back into our community?
During these challenging times, I would have thought economic growth was the number one priority.
With rising debt and interest payments, scaling down something that makes vehicles more affordable just doesn’t make sense.
Words: VACC CEO Geoff Gwilym. As featured in the Herald Sun 23 June 2023.