'Bit like calling last drinks before the bar is even opened': businesses want to apply for major 2023 budget announcement, but they can't
Rachel Power runs a cafe and hotel in regional Tasmania. (ABC News)
Small businesses are calling on the federal parliament to urgently pass a budget measure, which was promised last year, but expires on June 30.
Rachel Power runs a cafe and hotel in regional Tasmania.
Like many businesses she’s watching every dollar she and her business partner spend trying to grow their business.
“At this time of year when we look at what we’re looking at for the future and we’re looking at our own budgeting for next year, this is when we look at how can we best minimise our tax but also what assets do we need to be investing in potentially now rather than when they break,” Ms Power said.
That’s where the instant asset write-off comes in.
In simple terms, eligible businesses can claim an immediate tax deduction after buying something — like a new ute or coffee machine.
It was first introduced in 2011, but it’s been updated over time.
For example, as part of the 2023–24 Budget, the government announced it would temporarily increase the instant asset write-off threshold to $20,000.
Ms Power has a few items on her list she’s thinking of replacing.
“Things like deep fryers, we’ve got dishwashers, we’ve got cake fridges, we’ve got drinks fridges,” she said.
“When we look at a new product we hopefully will be able to get that not only on sale but we also then, if we’re writing that off as an instant tax write-off, we get that tax portion back so in my head I work on about a third, so it’s a discount of about 30 per cent.”
However, the window to make use of the bill, known as the Treasury Laws Amendment Bill 2023, which paves the way for businesses to apply for a tax deduction, closes in roughly eight weeks.
“There was a joint letter written to copy at least six months ago really calling out concern about the failure for it to be legislated about half-way through the financial year and now we’re almost at the very end of the financial year,” Small Business Council CEO Luke Achterstraat said.
“It’s a bit like calling last drinks before the bar is even opened,” he said.
“We really need these programs to be given certainty, not at five minutes to midnight but actually given certainty over a period of time, ideally over the forward estimates.
“Because we know potentially the parliament works on a schedule where things get passed pretty late in the piece but certainly that’s not how business operates.”
Ms Power said businesses need time to make spending decisions based on new laws.
“We’ve just built new accommodation, so there’s a lot of things we need to write off so we can continue to grow our small business and continue to employ more people,” she said.
“If they don’t do that we may have to re-look at that structure for the next 12 months.”
Why has the passage of the bill in parliament been so slow?
The government’s bill proposed to temporarily increase the instant asset write-off threshold to $20,000.
But the Coalition wanted to increase the threshold to $30,000 – allowing businesses to claim accelerated depreciation on a wider range of assets.
While this amendment, with crossbench support, passed the Senate in March, it’s now sitting in the House of Representatives waiting for final sign-off and parliament does not sit again until later this month.
A spokesperson for the treasurer told the ABC: “The only thing standing between small businesses and cashflow support this financial year is the grandstanding and delaying tactics of the opposition and crossbench.”
“Unless they urgently pass the legislation in the upcoming sittings, businesses may miss out on this important cashflow support when they lodge tax returns from 1 July,” the spokesperson added.
The opposition pointed out that the government voted against the amendments in the Senate.
It’s unclear if the higher threshold will be passed by the lower house.
“The fact it was announced in last year’s budget and the legislation has not come through — it’s really asking for a fair bit of faith on behalf of businesses who are potentially looking to change their behaviour,” Mr Achterstraat said.
“These incentives are about bringing forward responsible investment in productive capacity so it does really beggar belief.”
Ms Power is holding out for the bill to be passed in coming days.
“We still have been working on the premise that it probably will be,” she said.
“We haven’t attempted to claim anything as yet.
“Obviously we will be doing that soonish is when we will be looking at that.”
As it stands, businesses with a turnover of less than $10 million can claim the instant asset write-off for assets valued less than $1,000 and that are first used or installed between July 1, 2023 and June 30, 2024.