Minister for Small Business Julie Collins has shied away from permanent changes to the instant asset write-off scheme, as small businesses endure another anxious wait for the cashflow-boosting measure to become law.
Legislation underpinning the instant asset write-off scheme for the 2023-2024 financial year is yet to pass through Parliament, with only four sitting days remaining on the calendar before July 1.
The Labor government is pushing for eligible small business purchases worth up to $20,000 to receive instant tax deductions.
But Coalition-led amendments, which passed in the Senate, call for a $30,000 limit and expanded business eligibility.
Labor says expanding the scheme any further could drive unwanted inflation.
That dispute has seen the legislation bounce between the Senate and the House of Representatives without resolution.
Should a new $20,000 or $30,000 limit not pass into law, the default instant asset write-off limit will drop to just $1,000 for 2023-2024, forcing SMEs to depreciate major purchases over many years instead of in one hit.
The hold-up has drawn the ire of observers like Australian Small Business and Family Enterprise Ombudsman Bruce Billson, who this week pleaded for long-term thinking in small business policy-making.
There is a “need for predictability and certainty” so small businesses can invest and build their productivity, he wrote in The Canberra Times.
Given its vital importance to many small businesses, the measure is likely to pass, in one form or another, in the final sitting days of the financial year.
However, Minister Collins says permanent changes to the instant asset write-off scheme are currently unfit for purpose, meaning businesses should expect more year-by-year adjustments in the future — and the potential for further parliamentary hold-ups.
“Making sure that the budget is fit for purpose for the time, that’s what that’s about,” Minister Collins told SmartCompany on Friday.
Minister Collins insists a $20,000 threshold is appropriate for the current financial year, and the next, as greater tax benefits could stoke further inflation.
While Minister Collins did not definitively claim Labor will avoid permanent adjustments at some point in the future, for the time being, the government says a flexible and year-by-year approach is appropriate.
“It’s about making sure that each budget, each year, is a response to the economy at the time, and giving the government of the day, particularly our government at the moment, the ability to carefully calibrate it like we have in this budget,” Minister Collins continued.
On the possibility of yet another parliamentary stoush in twelve months’ time, Collins said the Coalition has its own role to play.
“I hope the Opposition has learned its lesson and that it gives small businesses the respect they deserve,” she said.
For its part, Labor’s political opponents say the delay is not of their own making.
“It is disappointing the government is trying to sheet blame on everyone but themselves when it comes to this issue,” Shadow Minister for Small Business Sussan Ley told SmartCompany last week.
“Labor runs the Parliament, and they control the flow of bills through the Parliament and any delay to the legislative schedule is a matter for them to explain.”
Collins’ comments coincide with her visit to Melbourne, the site of the next meeting of state, territory, and federal small business ministers.
The meeting, the fourth of its kind since Labor took office in 2022, will progress what Collins described as a national small business strategy to align efforts across two levels of government.
“It’s about working out the ways that we can work together, how state strategies can fit together in a national framework, and where the gaps might be,” she said.
The issue of payroll tax — which is set by each state and territory government, and has long confounded businesses hoping for conformity over state lines — remains an area of contention.
“The states and territories are responsible for this area,” Minister Collins said.
“They set their own limits, and some states have made announcements in recent times about the different measures.”
However, the Minister circled state and territory cyber security strategies as an area for potential collaboration, suggesting input from the Commonwealth could benefit the SMEs turning to their local jurisdictions for advice and support.
“What we want to do is make it easier for small businesses, and not have ad hoc programmes that might make things harder for small business,” she said.
Editor’s note: this report was updated at 2.20pm on June 14, 2024, to more accurately reflect Minister Collins’ comments.
Never miss a story: sign up to SmartCompany’s free daily newsletter and find our best stories on LinkedIn.
Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
