Last night’s Federal Budget delivered a boon for small business owners, allowing them to instantly claim back purchases of up to $20,000 – including new and used vehicles.
Federal Treasurer Joe Hockey announced the tax break last night, which means that businesses with an annual turnover under $2 million can claim tax deductions immediately for an unlimited number of sub-$20,000 purchases made between now and June 30, 2017.
The amendment is a significant increase from the current instant asset write-off threshold of $1000.
It means that work-related purchases below $20,000 are now instantly tax deductible, rather than needing to claim purchases as deductions over several years.
Assets over $20,000 aren’t eligible for the instant write-off, but can be written off in full over a longer period of time.
Additionally, businesses with an annual turnover of less than $2 million will also be subject to a lower tax rate, down from 30 per cent to 28.5 per cent.
Along with used vehicles, all micro cars, most light cars, many entry-level small cars, and a number of base-grade utes and vans are available for less than $20,000 before on-road costs.
Victorian Automobile Chamber of Commerce executive director Geoff Gwilym welcomed the tax breaks for small business owners.
“As the treasurer promised, this was a budget for small businesses who want to innovate and grow,” Gwilym said.
“VACC members provide valuable services for the community and industry and they welcome this support.”
Ford Australia communications and public affairs director Wes Sherwood told CarAdvice the company wasn’t expecting a direct sales boost as a result of the small business tax break, but acknowledged it might have flow-on effects that could give the industry a lift over time.
“It looks like something designed to stimulate the economy, so that’s something we absolutely support,” Sherwood said.
“On that specific tax measure, we don’t think it’s going to be such a big thing for Ford or for the industry … but if small businesses are feeling better overall they might look to update [their existing vehicles], so that’s something we absolutely support.”
Experts have warned small business owners about buying up big before the tax break passes Parliament, however.
“The scale and generosity of this proposal is unprecedented and, while the treasurer has announced that it will begin [on Budget night], history suggests he shouldn’t take the Senate for granted,” Australia Institute executive director Richard Denniss told ABC News.