Australia’s small businesses are facing another frustrating setback as the $20,000 Instant Asset Write-Off (IAWO) has been deferred yet again, leaving entrepreneurs in a cloud of uncertainty.
The legislation to extend the popular tax incentive for another year was abandoned during Parliament’s last-minute push to pass a flurry of bills before the Christmas break. For many SMEs, this feels like déjà vu—another year of waiting and wondering if this critical support will come through in time.
The IAWO, designed to encourage small businesses to invest in equipment and growth, is a vital tool for many enterprises. However, its annual extensions, often passed at the last moment, have created an unreliable system that undermines its effectiveness. Luke Achterstraat, CEO of the Council of Small Business Organisations Australia (COSBOA), likened the situation to “Groundhog Day,” a reminder of previous years when legislation was only passed mere days before the application window closed. “Small businesses operate on forward investment schedules,” he noted. “Certainty is required for small businesses to take actual advantage of this tax incentive.”
So why is it being delayed?
The $20,000 Instant Asset Write-Off (IAWO) is being delayed due to a mix of political priorities, legislative bottlenecks, and lack of bipartisan agreement. Here’s a breakdown:
Parliamentary Time Crunch
In the final rush before the Christmas break, Parliament had to pass dozens of bills. The IAWO extension was part of Schedule 7 in a broader legislative package but was cut to prioritize other measures that had more immediate bipartisan agreement or urgency.
Election Year Dynamics
With a federal election looming, neither party seems eager to negotiate the finer details of the IAWO, likely preferring to save it as an election platform issue. Labor appears committed to its $20,000 threshold, while the Coalition is pushing for a higher cap and permanency.
Recurring Pattern of Last-Minute Extensions
Historically, the IAWO has been extended on a year-to-year basis, often at the last minute. This lack of foresight reflects a broader failure to establish it as a permanent measure, leaving it vulnerable to delays.
Debate Over Threshold and Permanence
The $20,000 threshold has not been adjusted in a decade and is seen by many as outdated. Advocates are pushing for increases to reflect inflation and the real costs of productive assets. This debate creates additional complexity in reaching consensus.
Competing Legislative Priorities
The government’s focus on other pressing issues and reforms has sidelined the IAWO. Additionally, with no immediate pressure to resolve it (as applications are only needed by the end of the financial year), it’s an easy target for deferral.
This year, the uncertainty is compounded by the looming federal election, expected by May. As politicians gear up for the campaign trail, the write-off is likely to become a political football. Labor, which set the $20,000 threshold in its recent federal budget, seems unlikely to budge, while the Coalition has called for the threshold to be lifted to $30,000 and for the program to be made permanent.
Business advocates are growing weary of the annual tussle. Achterstraat has called for a significant overhaul, suggesting the threshold should be increased to $100,000 to better reflect the costs of productive assets like industrial machinery and commercial refrigeration, which often exceed the current limit. “The annual bickering and finger-pointing has become tiring,” he said. “It’s time to make this program permanent.”
The Australian Chamber of Commerce and Industry echoed these sentiments, with CEO Andrew McKellar calling the delay a “real poke in the eye for small business.” The uncertainty, he argued, is a “wasted opportunity” to support entrepreneurs ready to invest in new assets.
As the political debate unfolds, small businesses are left in a bind. Without clarity, many are hesitant to commit to equipment purchases or expansions, fearing that the promised tax relief may not materialize. For businesses reliant on the write-off, the lack of action feels like a broken promise, and they are now looking to policymakers to deliver not just words but lasting solutions.
With the election on the horizon, small business leaders are urging both major parties to prioritize the IAWO. Making the program permanent and increasing the threshold could provide much-needed stability, enabling SMEs to focus on growth rather than navigating uncertainty. For now, though, the fate of the write-off remains uncertain, leaving Australia’s entrepreneurs waiting once again.
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