The Australian Government supports the business that helps the economy withstand and recover in these hard times. Therefore the Government makes two business investment measures in package, made to encouraging a stronger economic recovery after the Covid-19 emergency. The measures will support over 3.5 million businesses, with an aggregated annual turnover of less than $500 million employing more than 9.7 million employees.

The package has two business investment measures to involved the business investment:

1. increase the instant asset write-off threshold and expand its eligibility
2. introduce a time-limited 15-month investment incentive to support business investment and economic growth over the short-term, by accelerating depreciation deductions.

Increasing the instant asset Write-off (IAWO)

The Government is increasing the instant asset write-off threshold from $30,000 to $150,000 and expanding access to include all businesses with an aggregated annual turnover of less than $500 million until 30 June 2020.

The higher IAWO threshold provides cash flow benefits for businesses that will be able to immediately deduct purchases of eligible assets each costing less than $150,000. The threshold applies on a per asset basis, so eligible businesses can immediately write-off multiple assets.

The Government is expanding access so that more businesses can take advantage of the IAWO. The annual turnover threshold for businesses is increasing from $50 million to $500 million. This means an additional 5,300 business who will be able to access the IAWO.

Important is the timing: the proposal is applied from the announcement (12 March 2020) until 30 June 2020, for new or second-hand assets first used or installed in this timeframe.

This measure is estimated to have a net cost of $700 million over the forward estimates. It will support business investment and is estimated to lower taxes paid by Australian businesses by $2.5 billion over the next two years.

Backing business investment (BBI)

Until 30 June 2021, the government is providing an investment incentive to support the business investment and economic growth, by accelerating depreciation solutions.

Thre are the key features of the incentive:

1. benefit: deduction of 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost;
2. eligible businesses: businesses with aggregated turnover below $500 million;
3. eligible assets: new assets that can be depreciated under Division 40 of the Income Tax Assessment acquired after
   announcement and first used or installed by 30 June 2021.

This operation is applicable to the business with an aggregated turnover below $500 million.

Important is the timing: the proposal is applied from the announcement (12 March 2020) until 30 June 2021.

This measure is estimated to have a cost of $3.2 billion over the forward estimates. It will support business investment and is estimated to lower taxes paid by Australian businesses by $6.7 billion over the next two years.

Source: Australian Government – the treasury