INSTANT ASSET WRITE OFF KEPT ALIVE

The government will keep the Instant Asset Write Off, introduced during the Covid era, with the Senate raising the proposed level, but local printers are calling for it to be dramatically increased to help them compete with overseas operators.

The Instant Asset Write Off, which enabled all depreciation to be accounted for in the year of purchase, rather than over five, seven or more years, was due to expire on 1 July. However, the current Labor government has voted to keep it going, for all purchases up to $20,000 a year, with the Senate then upping it to a $30,000 limit. It also increased the size of businesses eligible from $10m turnover to $50m. There are no limits to how many $30,000 depreciation claims can be made, although only one per each piece of equipment. Federal treasurer Jim Chalmers said, "We are cutting taxes to support small business."

While welcome, not all printers are happy with the approach, labelling it as a missed opportunity and an opportunity for overseas printers to win work on Australian soil. Baden Kirgan for instance, head of Jeffries Printing in Sydney, said, “$30,000 will let you update PCs and forklifts, but make it $1m and we can renew our kit for a competitive edge.”

Describing $30,000 as “A good move for what it is”, Kirgan pointed out that, “Australia has a serious disadvantage to the rest of the world because of our (well-deserved) high wages. It's hard to quote against a foreign printer who has the same equipment as you, because their wages are so much lower. But we win against them when we have the best gear. We already have much better trained people earning those high wages – give them the right equipment and there is no stopping them.

“It makes sense to lean into that. Allowing businesses to write off major capital gear in the year they buy it will make domestic industries much more productive.

"If they allowed say up to $1m per purchase, but limited the maximum amount claimable in a year to (say) $5m a year for each business, they could still keep it reasonable, while allowing businesses the ability to rekit."

The industry employers group Visual Media Association is also less than impressed with the move. Charles Watson, IR, governance and policy manager said, “The increase to the instant asset write off threshold and the increased number of businesses being able to access that initiative is welcomed. However, for most members in our industry I do not believe $30,000 will assist them greatly to invest in new equipment or systems.”

Teal MPs are currently giving the government a serve on its approach to small business, accusing it of focusing on unions and big business. Zali Steggal, MP for Warringah, who wants the instant asset write off upped to $50,000 next year, said the government had "dropped the ball" on small business.

As part of the same piece of legislation, the government has also kept its policy of providing businesses with turnover up to $50m with an entitlement of a bonus 20 per cent tax deduction on batteries and other electrical devices, when they invest up to $100,000 to swap out fossil fuel energy and technology. The maximum bonus tax deduction is $20,000 per business.