Politicians need to put down the IAWO ‘bargaining tool’: CPA, ACCI
Peter Dutton’s pledge to make the instant asset write-off measure permanent is welcome but shouldn’t be treated as a “political football”, CPA Australia has said.
In the opposition budget delivery, Peter Dutton has promised to make the instant asset write-off (IAWO) permanent and increase the limit to $30,000.
If Dutton won the upcoming federal election on 3 May, the pledge would be welcomed by Australian small businesses after the Albanese government failed to address the future of the IAWO in the federal budget last Tuesday.
CPA Australia voiced support for the announcement, however, also outlined that the IAWO was crucially important to small businesses and shouldn’t be used as a “political football.”
The current IAWO measure was passed by the Senate late last week at $20,000 and was set to expire on 1 July and would revert to $1000 for business with revenue up to $10 million a year.
Chris Freeland, chief executive of CPA Australia, said Dutton’s pledge to make the threshold permanent at $30,000 would be a game changer for small businesses.
“The instant asset write-off provides a vital opportunity for small businesses to invest and grow. As a temporary measure only, it has not been utilised as much as it could have. Small businesses in particular need policy certainty to make informed investment decisions, especially when they involve significant financial commitments,” he said.
“The practice of legislating this measure annually has created uncertainty and has discouraged investment at a time when many businesses are keen to take advantage of such incentives. The instant asset write-off has been a low-hanging fruit that small businesses have been hoping to utilise, but many have resisted because of the fear that it would be taken away. Businesses cannot operate like this.”
Other small business representatives, including the Australian Chamber of Commerce and Industry (ACCI), also welcomed the temporary passage of the legislation, but reinforced the importance of making the measure permanent for the benefit of Australian small businesses and the broader tax system.
The common message communicated by the small business community following last week’s events was that small businesses should not have been used as a bargaining tool for legislative power or gain.
Andrew McKellar, chief executive of the ACCI, said the saga in getting the legislation promised in last year’s budget and only passed now, nine months later, highlighted why it should be permanently enforced.
“It really is a disgrace that this legislation was brought on late last year, then pulled and shelved until last week when the cross bench insisted it be passed,” McKellar said.
“The instant asset write-off should be made a permanent feature of the tax system. Small businesses need certainty to invest, and right up until late last week, there was no certainty that this legislation, promised almost 12 months ago, would be in place this financial year.”
“Small business is the engine room of our economy, and policies affecting it are too important to be used as political playthings.”
In addition to making the IAWO permanent, ACCI called for the threshold to be increased from $20,000 to $50,000 and extended to businesses with a turnover of $50 million, up from $10 million.
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