The Albanese Government has tabled legislation that will offer an instant asset write-off for one year for Australian small businesses.
Schedule 1 to the Treasury Laws Amendment Bill 2023 allows businesses with aggregated annual turnover of less than $10 million to immediately deduct eligible assets costing less than $20,000 from 1 July 2023 until 30 June 2024.
The $20,000 threshold will apply on a per asset basis.
Schedule 2 to the Bill will introduce the Small Business Energy Incentive, a 2023‑24 Budget measure designed to help small and medium businesses save on their energy bills.
Up to 3.8 million small and medium businesses with aggregated annual turnover of less than $50 million will have access to a bonus 20 per cent deduction for eligible assets supporting electrification and more efficient use of energy.
The new tax incentive applies from July 1, 2023 until June 30, 2024. Up to $100,000 of total expenditure will be eligible for the incentive, with the maximum bonus tax deduction being $20,000.
In a joint media statement, Minister for Small Business Julie Collins and Assistant Treasurer and Minister for Financial Services Stephen Jones said the Bill delivers measures announced in the 2022‑23 Budget.
“Small businesses are the engine room of Australia’s economy, which is why these new measures are so critical,” the statement read.
The National Retail Association (NRA) welcomed the Bill, saying it will boost resilience for a significant portion of the retail sector.
“High interest rates, rising cost-of-living, and wage costs have taken hordes of money out of the pockets of small business owners, and these initiatives would restore some of those lost funds,” NRA noted in a statement.
“We’re pleased to see the Government deliver on its Budget promises, and we hope these measures quickly become accessible to small retailers so they can continue to keep their heads above water.”
The Bill comes as Australia’s retail sector witnesses a downtrend in household spending.
According to recent data from the Australian Bureau of Statistics (ABS), household spending was 0.7 per cent lower in July 2023 compared to the same month last year.
Clothing and footwear drove the second largest drop in household spending by 7.5 per cent, just behind furnishings and household equipment (-7.9 per cent) and ahead of alcoholic beverages and tobacco (-4.0 per cent).
ABS head of business statistics Robert Ewing said households have curbed their spending over the past 12 months amid higher interest rates and inflation.
“This is the first time since February 2021 that the spending indicator has fallen,” Ewing said.
“Spending on discretionary goods and services was down for the fourth straight month. It fell 3.3 per cent over the year, as households adapt to cost of living pressures.
“Non-discretionary spending rose 1.7 per cent, which is the lowest growth rate since early 2021.”