BMO Business Centre has welcomed the Government’s decision to extend the instant asset write-off threshold for small business in Tuesday’s Federal Budget.
BMO Partner David Briese said this year’s Budget aims to ease the cost of living pressures while ensuring the nation lives within its means. He said that the decision to continue the accelerated depreciation rule for small business is a positive step forward.
“Small businesses with a turnover up to $10 million will be able to immediately write off expenditure of up to $20,000 on business equipment until 30 June 2018” Mr Briese stated.
The centrepiece of the Coalition’s budget is the use of ‘good debt’ to fund $75 billion worth of infrastructure projects to create jobs and promote economic growth.
To achieve this and return the budget to surplus the Government has also introduced measures to cut everyday spending on universities and welfare, Mr Briese explains further.
“The price of university degrees will increase 7.5 percent between 2018 and 2021. As of July 2018, graduates will need to start paying back their HELP loan at the lower threshold of $42,000. This will impact the after-tax incomes of university graduates, but not for at least a year.
“While the increase to the Medicare levy from 2 per cent to 2.5 per cent of your taxable income will affect all working Australia’s, it will not come into effect until 1 July 2019” Mr Briese said.
Rental property investors will be worse off from the Budget with a cut to deductions they are able to claim.
“While the Government has made good on its promise to maintain negative gearing, property investors have little to cheer about. They’ll no longer be able to claim a tax deduction on the costs involved in travelling to inspect their properties.
“There will also be a tightening of depreciation deductions. Deductions for plant and equipment – for example, a washing machine – will only be allowed for the investor who initially purchased them” Mr Briese said.
Previously, subsequent owners of an investment property could also make deductions on these items.