2 in 3 SMEs benefit from instant asset write-off, survey reveals
The uncapped version of the instant asset write-off scheme was extremely popular among SMEs with the average spend over $90,000, according to ScotPac.
.
The latest SME Growth Index by ScotPac has shown that 63 per cent of Australian SMEs took advantage of the Uncapped Instant Asset Write Off Scheme in the financial year before the revised $20,000 per asset limit.
Since its introduction more than a decade ago, the Instant Asset Write-Off (IAWO) Scheme has allowed eligible businesses to claim an immediate tax deduction for the purchase of various assets, up to a specified threshold.
At the outset of COVID-19, the federal government increased the IAWO threshold from $30,000 to $150,000 to make it easier for small businesses to benefit from asset purchases. It later removed the cap entirely by introducing temporary full expensing.
It later removed the cap entirely by introducing temporary full expensing.
A revised IAWO threshold of $20,000 per eligible asset was introduced for 12 months from 1 July 2023.
The survey by ScotPac reveals that SMEs ramped up their use of the scheme in the lead-up to the capped version of the scheme.
The average amount spent by SMEs that used the IAWO scheme in the 2022–23 financial year was $91,500.
SMEs with declining or flat growth were the biggest users of the scheme with 68 per cent purchasing eligible assets, compared with 59 per cent of growth SMEs.
NSW and the ACT recorded the most use with 75 per cent of businesses in these states taking advantage of the scheme.
ScotPac CEO, Jon Sutton, said the IAWO scheme has been a major factor in SME decision making on capital expenditure in recent years.
“There is no doubt the Instant Asset Write-off Scheme has achieved its objective of encouraging SMEs to invest in assets to help grow their business,” Mr Sutton said.
“In raw numbers, hundreds of thousands of SMEs were able to claim tax relief worth billions of dollars for assets purchased in 2023-24.
“When you consider the rising costs faced by all businesses in that period, including the cost of critical assets, the Instant Asset Write-off scheme has provided a great boost for SMEs,” Mr Sutton said.
Under the current IAWO threshold, a $20,000 cap applies on an asset-by-asset basis.
Assets valued at more than $20,000 are placed into the small business depreciation pool and depreciated over several years.
Mr Sutton said while there was understandable disappointment that the temporary full expensing measure had ceased, the current IAWO scheme still provided incentives for SMEs to invest in capital.
“Average capital expenditure levels for SMEs are continuing to grow,” he said.
“While recent changes to the scheme have removed the immediate tax benefit for larger items, the $20,000 per asset cap still provides opportunities for SMEs looking to expand or upgrade their asset base.”
Miranda Brownlee
31 January 2024
accountantsdaily.com.au/
Hot Issues
- Estate planning considerations
- 5 checklists to support your business
- Are you receiving Personal Services Income?
- What Employment Contracts Does My Small Business Need?
- The superannuation changes from 1 July
- Hasty lodgers twice as likely to make mistakes, ATO warns
- Landlords who ‘double dip’, fudge deductions in ATO crosshairs
- Most Spoken Languages in the World
- Tax Time Checklists - Individuals; Company; Trust; Partnership; and Super Funds
- Compare your business
- 2024 Year End Tax Planning Guide (Part 2)
- ATO to crack down on rental income, WFH deductions this tax time
- How to Draft a Standard Form Contract
- GST, PAYG withholding a ‘significant portion’ of $50bn tax debt
- ATO changes will make it harder for over 42,000 small businesses.
- The Deadliest pandemics in History
- Budget breakdown – Federal Government Analysis
- Federal Budget 2024
- Winners & Losers
- 2024 Year End Tax Planning Guide (Part 1)
- Medicare levy surcharge OR basic health insurance ?
- ATO warns of ‘serious penalties’ for unlawful tax scheme promoters
- ACCC scam report
- Employees taking more sick days - and it's getting worse
- Foreign residents selling property in Australia
- How much does negative gearing really cost – an overview and an opinion?
- The Shortest-reigning Monarchs in History
- FBT Reminder – Odometer Reading
Article archive
- April - June 2024
- January - March 2024
- October - December 2023
- July - September 2023
- April - June 2023
- January - March 2023
- October - December 2022
- July - September 2022
- April - June 2022
- January - March 2022
- October - December 2021
- July - September 2021
- April - June 2021
- January - March 2021
- October - December 2020
- July - September 2020
- April - June 2020
- January - March 2020
- October - December 2019
- July - September 2019
- April - June 2019
- January - March 2019
- October - December 2018
- July - September 2018
- April - June 2018
- January - March 2018
- October - December 2017
- July - September 2017
- April - June 2017
- January - March 2017
- October - December 2016
- July - September 2016
- April - June 2016
- January - March 2016
- October - December 2015
- July - September 2015
- April - June 2015
- January - March 2015
- October - December 2014