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With the 2020 Federal Budget bringing news of a new instant asset write-off measure for Australian small businesses, SMEs are being urged to use the opportunity to digitise.
Under the new scheme, businesses are able to claim the full value of all new eligible depreciable assets of any value which are first used or installed before June 30, 2022.
The scheme is essentially a vastly expanded accelerated depreciation program that allows businesses to claim a tax deduction for the full value of a purchase after its use, rather than claim depreciation amounts over several years.
The Government will support businesses with aggregated annual turnover of less than $5 billion by enabling them to deduct the full cost of eligible capital assets acquired from 7:30pm AEDT on 6 October 2020 (Budget night) and first used or installed before 30 June 2022.
Jonathan Attia, Managing Director at fintech startup Wiise, believes that Australian SMEs must utilise the new asset write off measures to increase their cash flow to support their business.
“Ultimately, the instant asset write-off is just a great way for businesses to give their cash flow a benefit in the immediate term,” he said. “Businesses are able to spend more, and get a write off on more things, which will in turn increase their cash flow.”
Prime Minister Scott Morrison has encouraged all businesses to digitise in the midst of the coronavirus recession, saying prior to the Federal Budget release: “The plan supports Australia’s economic recovery by removing outdated regulatory barriers, boosting the capability of small businesses and backs the uptake of technology across the economy.”
Mr Attia has explained that as the pandemic has forced small businesses to digitise quickly, they can utilise the instant asset write off incentive to invest in digital technologies and solutions they need to survive and succeed moving forward.
“Early on, we saw businesses move to remote working, and that means of communication tools became more pertinent,” he said. “What we’ve also seen is a lot of demand for some workforce management software and HR software. Businesses have needed to be more flexible and scalable in their operating models, and in their workforce.”
“Any government incentive that will allow businesses to become digital and move to the cloud and get the right sort of software to manage the business now is gonna be really important. If not now, then someday.”