CPA Australia calls for 2-year extension to stalled tax break
The government’s pattern of announcing tax incentives but failing to pass them has become a “running joke” for accountants, it says.
CPA Australia has called for a two-year extension to the government’s small businesses energy incentive after being stalled in the Parliament since November.
Business investment and international lead Gavan Ord said the delay in passing the measure was the latest in a “running joke” of announcing tax incentives but only implementing at the very last minute.
“Businesses need to operate in an environment of certainty. Big announcements about tax incentives followed by a year of uncertainty are unhelpful and frustrating,” he said.
“These temporary incentives that become law at the very last minute have become a running joke with tax advisers.”
The small business energy incentive was announced by the government in May 2023, promising power bill relief while incentivising the take-up of environmentally friendly equipment for businesses with annual turnovers of less than $50 million.
Up to $100,000 of total expenditure would be eligible for the incentive, with a maximum bonus tax deduction of $20,000 per business, the government said.
But with the measure set to expire on 30 June, Ord said it needed at least a two-year extension to have any “real impact” by giving businesses adequate time to purchase and install eligible equipment.
“There will be many small and medium-sized businesses that would jump at the chance to upgrade their facilities and benefit from such a tax break, but with the proposal only expected to become law days before the measure expires, it’s difficult to see many businesses taking advantage of it in time,” he said.
“How are businesses expected to purchase more energy-efficient equipment and have it fully installed and ready for use in just days?”
“The worst thing a business can do is rush into making big decisions, especially when it involves spending significant amounts of money.”
The small businesses energy incentive is part of the Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Bill 2023.
The bill was introduced to Parliament in September but has been delayed due to disagreements between the House and Senate over provisions on the small business instant asset write-off scheme.
Professional bodies like the Tax Institute have urged the government to make the scheme permanent, while the National Tax & Accountants’ Association (NTAA) has criticised the “political stand-off” after the lower house voted down the Senate’s proposal to amend the threshold to $30,000 last month.
NTAA spokesperson Andrew Gardiner said the situation was “denying certainty to small and medium-sized businesses and their tax advisers regarding the tax implications of purchasing many business assets”.
Ord called on the government to cease relying on short-term measures.
“The government knows that the parliamentary process is clogged up, with little chance of such measures passing with the necessary speed,” he said.
“That’s why we are calling on the government to extend the measure for at least a further two years. This will give businesses a little more certainty and time to make the right decisions for their businesses.”
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