The Federal Government’s expanded instant asset write-off scheme, while very welcome, should be extended until at least the end of the year in order to have a substantial positive impact on businesses.
In response to the Covid-19 crisis, the government increased the instant asset write-off threshold from $30,000 to $150,000 and lifted the turnover threshold from $50 million to $500 million. The government had already rolled over the scheme a number of times and increased it from the original $20,000 level early last year.
But currently the scheme is due to reset to just $1000 as of July 1, and without the usual Budget process taking place in May, there is uncertainty over what will happen going forward.
The scheme has great intentions – getting businesses to invest in new plant and equipment quickly, benefiting both themselves and the firms which sell or design and install it for them.
But with the expanded scheme only announced on March 12 – and the need for plant and equipment to be “first used or installed ready for use” by June 30 for the deduction to be eligible this year – the window for firms wanting to buy equipment with a longer lead time has been short.
In our industry for example, there is a design process which precedes installation, plus approvals to be sought from the relevant electricity distributor. These tasks can take weeks to months, making it difficult to hit the June 30 deadline for a fully installed solar PV or battery storage system.
While it has been achievable in some cases, many more businesses would be able to take advantage of this productivity-boosting measure if the deadline was extended.
In the case of solar and battery installations, this leads to cost savings for businesses and further progress on our emissions goals.