The National Road Transport Association (NatRoad) has called for reinstatement of the instant asset write-off (IAW) scheme in the forthcoming federal budget.
NatRoad CEO Warren Clark said the previous government’s decision not to extend the popular instant asset measure in its last budget was putting strain on small road transport operators.
“The Morrison government decided to let it wind down, despite it being a popular measure for small businesses with very little negative impact on the economy’s bottom line,” Clark said.
“Buying a truck or trailer is a massive capital outlay and the biggest one that most operators will make.
“Any tax relief like that will be welcome as our industry is really feeling the pain of high diesel prices.”
Since 2015, the instant asset write-off initiative has allowed businesses to immediately deduct the cost of asset purchases under a certain threshold, making it easier for small business owners to invest in their business. However, IAW is fast approaching its cut-off date of June 30, and many SMEs are feeling the pressure to take advantage of the scheme before it ends.
Moreover, with the temporary full expensing scheme also ending on June 30, it is a double whammy for small operators that could be looking into investing in a business asset this year. The temporary full expensing scheme was introduced in 2020 as a part of the federal government’s Covid-19 business rescue package to offer a cash flow benefit to businesses.
TIC CEO Tony McMullan had earlier cautioned that “many sectors of our economy are cooling due to interest rate rises and with still no announcement from the federal treasury over extending the delivery timeline for the Temporary Full Expensing incentive, that is scheduled end on June 30, industry remains concerned that many truck orders will be cancelled because trucks will not be completed and delivered into service by the end of this financial year, due to ongoing global supply chain issues. Cancelled orders would no doubt lead to job losses across the industry.”
From July 1, the day after the instant asset write-off scheme is scheduled to end, small businesses with an aggregated turnover below $10 million will have to depreciate any asset worth over $1,000 they buy over the effective life of the asset. For bigger companies, the threshold is $100, and any asset purchase above that must be depreciated.
In April last year, NatRoad supported the then federal opposition’s promise to introduce 30-day invoicing for 2.4 million Australian small businesses but Clark said an announcement is not considered likely to be in the budget.
“It’s something we’ve been seeking for decades,” Clark said.
“The Albanese government began a consultation process last year, but the report is not due until June.
“The 20 percent uplift deduction for businesses spending on skills training and digitization was made available to businesses with aggregated turnover below $50 million but is only available until June 30, 2024.
“Extending the measure beyond then would be another modest bonus for our industry.”