Stephen Jones (Whitlam, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

I present a supplementary explanatory memorandum to the bill. I seek leave to move government amendments (1) and (2) together.

Leave granted.

I move government amendments (1) and (2) on sheet UG105 as circulated together.

(1) Clause 2, page 2 (at the end of the table), add:

(2) Page 6 (after line 25), at the end of the Bill, add:

Schedule 4 — $20,000 instant asset write-off for small business entities

Income Tax (Transitional Provisions) Act 1997

1 Section 328-180 (heading)

Omit "30 June 2024", substitute "30 June 2025".

2 Subsection 328-180(1) (paragraph (b) of the definition of increased access year )

Omit "30 June 2024", substitute "30 June 2025".

3 Paragraph 328-180(4)(d)

Omit "30 June 2024" (wherever occurring), substitute "30 June 2025".

4 Subparagraphs 328-180(5)(e)(ii) and (6)(e)(ii)

Omit "30 June 2024", substitute "30 June 2025".

Luke Howarth (Petrie, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

by leave—I move opposition amendments (1) and (2) on sheet 1 to government amendment (2) on sheet UG105 together.

(1) Amendment (2), omit "$20,000 instant", substitute "Instant".

(2) Amendment (2), items 1 to 4, omit the items, substitute:

1 Section 328-180 (heading)

Omit "to30 June 2024".

2 Subsection 328-180(1) (definition of increased access year )

Repeal the definition, substitute:

increased access year: an income year is an increased access year if any day in the year occurs on or after 12 May 2015.

3 Paragraph 328-180(4)(d)

Omit "$20,000", substitute "$30,000".

4 Paragraph 328-180(4)(d)

Omit "and on or before 30 June 2024" (wherever occurring).

5 Paragraph 328-180(5)(e)

Repeal the paragraph, substitute:

(e) were a reference to $30,000, if the amount is so included at any time on or after 1 July 2023.

6 Paragraph 328-180(6)(e)

Repeal the paragraph, substitute:

(e) were a reference to $30,000, in relation to a deduction for an income year than ends on or after 1 July 2023.

My amendments will remove schedule 2 from the bill. It strikes at the government's attack on small business, which denies deductibility for the general interest charge and the shortfall interest charge. It will also amend the government amendment on the instant asset tax write-off. Removing deductibility of ATO interest charges on schedule 2 of this bill would deny deductions for ATO interest charges: the general interest charge and shortfall interest charge.

We believe this is another attack on small business. We've seen some 27,000 small and medium businesses close in the last three years. This is another added burden to these businesses at a time when many of them are doing it quite tough. Small businesses at this time can least afford what the government is doing, and that is why I am moving these amendments to remove the schedule.

The current arrangements, which allow for deductibility, take into account the uncertainty of the tax environment and that filed positions can be reviewed well after a tax return is lodged. The policy intent of these existing interest charges is to neutralise the loan benefit that a taxpayer gets due to the late payment of tax. The point of it is to put a taxpayer who is late paying tax in the same position as a taxpayer who has paid tax on time. But making these interest charges non-deductible goes beyond neutralising this loan benefit. It is effectively now an immediate penalty regardless of the debt levels or culpability of the late taxpayer. Denying these deductions is punitive. It risks exacerbating financial hardship for small businesses and their staff, who are already facing challenges, as I said before, such as high inflation, elevated interest rates and cash flow constraints. These businesses are facing record insolvencies, and, instead of tackling this issue, the government is hammering the small businesses again.

The government's proposed schedule 4 of the bill continues Labor's attempts to decimate the instant asset tax write-off. As I've said before, the instant asset tax write-off was previously pretty well unlimited during COVID but has now wound down to $20,000 and is not even ongoing. It should be ongoing. It should be standard business procedure for any small and family business in Australia that the instant asset tax write-off becomes permanent—100 per cent. And $20,000—I mean, you can't buy a vehicle; there are very few items you can buy with $20,000. Labor's proposal would limit the instant asset write-off to that $20,000 and not make it permanent.

The government has consistently been slow to provide certainty on the instant asset tax write-off, and this leaves small businesses in limbo and faced with uncertainty when they invest in their business. The coalition 100 per cent supports SMEs, and we're committed to lower, simpler, fairer taxes for Australia's 2.5 million small businesses. The coalition's position, as outlined in this year's budget-in-reply, is to extend the value of the assets eligible and to make this deduction permanent.

I would love to lift it way higher. As far as I'm concerned it should be $150,000-plus for an instant asset tax write-off. But the additional spending of the government—some $350 billion plus on top of the last budget that Josh Frydenberg handed down—makes it difficult right now to lift it beyond $30,000. People will have to wait; hopefully a coalition government is elected very soon, under the leadership of Peter Dutton, and we will have to wait for the taxes to come in as businesses improve. As businesses get more confidence and we see more company tax come in and income taxes go up, that's when we'll be able to, at some stage in the future, hopefully lift it beyond $30,000. But, right now, $20,000 and not making it permanent is a disgrace, and it shows how little the Albanese Labor government regard small and family businesses.

The coalition is serious about providing that lifeline, and I call on the government to support my amendment. It's not a big ask. As I said, we haven't made it $150,000, or unlimited, as it was previously; we've just lifted it from $20,000 to $30,000; it's not a big increase, and it's something the government should consider. You'd have bipartisan support to do that before the upcoming election.

Stephen Bates (Brisbane, Australian Greens) Share this | Link to this | Hansard source

Would the member for Petrie be able to clarify, regarding those amendments you have moved, that you've moved only sheet 1? My understanding is that these amendments only go to the instant asset write-off and do not remove schedule 2 of the bill. I ask just because he referenced that during his speech, so I just want to clarify.

Luke Howarth (Petrie, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

No, it does remove schedule 2 of the bill as well. So, it's removing schedule 2 of the bill in relation to striking out the general interest charge and the shortfall interest charge. Obviously we want small and medium businesses to pay, but they can receive that additional interest as tax deductions at the moment. The government is taking all that away, and we're saying that at this time, when there is high inflation, when 27,000 businesses have gone broke around Australia under this government, we think it is the wrong time to do that. So, it does remove that, and also the change to the instant asset tax write-off—just lifting it from 20 to 30 and making it permanent.

Milton Dick (Speaker) Share this | Link to this | Hansard source

The question before the House is that the amendments moved by the opposition be agreed to.

Zali Steggall (Warringah, Independent) Share this | Link to this | Hansard source

by leave—I move amendments (1), (3), (5) and (6) to government amendment (2) on sheet UG105, as circulated in my name, together:

(1) Amendment (2), omit "$20,000", substitute "$50,000".

(2) Amendment (2), items 1 to 2, omit the items, substitute:

1 Section 328-180 (heading)

Omit "to30 June 2024".

2 Subsection 328-180(1) (definition of increased access year )

Repeal the definition, substitute:

increased access year: an income year is an increased access year if any day in the year occurs on or after 12 May 2015.

(3) Amendment (2), after item 2, insert:

2A Paragraph 328-180(4)(d)

Omit "$20,000", substitute "$50,000".

(4) Amendment (2), omit item 3, substitute:

3 Paragraph 328-180(4)(d)

Omit "and on or before 30 June 2024" (wherever occurring).

(5) Amendment (2), after item 3, insert:

3A Paragraphs 328-180(5)(e) and (6)(e)

Omit "$20,000", substitute "$50,000".

(6) Amendment (2), omit item 4, substitute:

4 Paragraph 328-180(5)(e)

Omit all the words after "if the amount", substitute "is so included at any time on or after 1 July 2023.".

5 Paragraph 328-180(6)(e)

Omit all the words after "for an income year", substitute "that ends on or after 1 July 2023.".

It's really important that, in this place, there is always much said about support for small to medium business, but there isn't always the follow through when it comes to the actions that will make a real difference. Small to medium businesses perform much of the heavy lifting of our economy. Together, they account for more than half of the nation's GDP, and contribute over $500 billion to our economy, providing almost 70 per cent of local employment. Small businesses are struggling. The MYOB Business Monitor found that 33 per cent of revenue declined in small business for December 2025. It also found that 24 per cent of small businesses were struggling with maintaining cashflow. A fifth of small to medium businesses are still under pressure because of late payment from customers, consistent with the increased inflationary pressure we're seeing across the economy. The pressure of subsequent rental increases, cost of utilities, fuel prices, rising supply costs, lower consumer spending, the difficulty of finding and retaining staff, and, of course, much increased insurance premiums, all continue to have a really negative impact on small to medium business.

We need to do more in this place to stand up for small business. The government's amendment today has highlighted that small business is sometimes an afterthought, I would say, because I am critical that this bill is a bill that addresses a lot of issues, and it slaps a lot of things together. The instant asset write-off is an important feature of the tax system and it should be made permanent.

To that effect, I supported the amendment by the member for Petrie, but I would urge the opposition to now come and stand with me on this amendment because it is incredibly important we do more. This program incentivizes investment but also improves cash flow, and I very much support making this permanent so that businesses can plan ahead, instead of having what they've had over the course of this parliament—an argy-bargy between government and opposition, which then saw these provisions not come into effect in the financial year needed and businesses couldn't plan for and actually write off those assets.

But this instant asset write-off needs to be increased to $50,000 at a minimum. It reflects the instant asset write-off measures provided to small businesses during the pandemic. We know that was effective and efficient. Small businesses are still struggling with the impacts of the pandemic, lower migration and high supply costs. These measures are supported by small-business groups and industries such as COSBOA, the Australian Chamber of Commerce and Industry, and MYOB as well as industry groups such as the National Electrical and Communications Association. They all support that this instant asset write-off should be increased to $50,000. The move to increase it to $50,000 will assist with the rising cost of goods and services and the urgent need to stimulate growth in productivity.

These businesses need room to breathe. The rise of online cybersecurity will see a significant cost impact on small business. There has been a 20 per cent increase in the cost of goods since the pandemic. For construction businesses, building costs have risen 40 per cent since 2020. Costs of commercial vehicles have increased 104 per cent since January 2020. All of these issues identify how $20,000, whilst a good start, is simply not sufficient to genuinely help small business. So increasing it to $50,000 will provide that extra room for companies to provide wage increases and employ more casual and part-time workers.

It will make a difference when we're looking at the challenges small businesses face, especially the opportunity to electrify and to get some sustainability and some efficiency within their operations. It simply cannot be done for $20,000. The reality is, for example, with a small business that owns their premises and wants to put solar on the rooftop, get a battery or electrify their fleet, if they want to get some efficiencies around their air-conditioning operations, get new plants or new infrastructure, all of these things will be significantly more than $20,000.

I've met with the chambers of commerce and many small businesses in my electorate. They are desperately asking the government and the opposition to come together with a meaningful change so that small businesses can improve their cash flow, invest in their structure, increase their productivity and ultimately employ more people within our community. I urge the opposition—be more than just words and more than just promises at election time. Come and stand with us. I urge the government, of course, to do so as well and vote for this to be a $50,000 asset write-off for small businesses.

Elizabeth Watson-Brown (Ryan, Australian Greens) Share this | Link to this | Hansard source

I rise to speak in support of the member for Warringah's amendment to the Treasury Laws Amendment (Tax Incentives and Integrity) Bill 2024. The Greens support increasing and extending the instant asset write-off, which allows small businesses to claim an immediate deduction for the business portion of the cost of an asset in the year the asset is first used. The Greens understand how important small businesses are to our communities and the broader economy. I very much understand this myself from deep and long-term personal experience. For half a century, I was a director of my own practice and of small and then medium businesses.

Small businesses make a huge contribution to Australian society and the economy. We also know that too many small businesses are struggling right now in the wake of the pandemic and with high inflation and interest rates. These important employers of so many Australians need some extra support. Extending the instant asset write-off will give small businesses the certainty that they need, as the member for Warringah mentioned, to invest in their businesses, which will have flow-on effects for their customers, workers, the communities they're based in and, indeed, the whole Australian community.

Monique Ryan (Kooyong, Independent) Share this | Link to this | Hansard source

I would like to speak to a slightly different piece of the Treasury Laws Amendment (Tax Incentives and Integrity) Bill, if I could. With respect to the instant asset write-offs, I did want to draw the chamber's attention to the fact that I think, in many cases, this bill is being misused by some consumers, particularly with respect to the write-off of the luxury car tax discounts. Essentially the issue here is the issue regarding people using this tax law to write off utility vehicles when in many instances it's reasonable to conclude that the vehicles are actually being purchased for non-commercial purposes.

If we look at the cars bought in Australia in 2023, nearly a quarter of them were light utility vehicles or utes—that's 3.1 million vehicles purchased in that year. There are only 1.94 million tradies in Australia, so it's reasonable to assume that in many instances these vehicles are not being purchased for commercial purposes but, rather, are being used by individuals for non-commercial purposes. That being the case, it's not appropriate that the luxury car tax is giving these people a tax cut. It would make sense that we change this legislation such as to exclude those luxury utility vehicles from the commercial vehicle exemption. I've written to the Treasurer about this in the past but not yet received a response.

We know that tradies who are actually using their cars for work are unlikely to be adversely affected because of this, because the models of their choosing are below the luxury car tax threshold. I put that before the House and before the Assistant Treasurer, in terms of the fact that it's inappropriate for us to continue to give tax breaks to people who don't need them and shouldn't deserve them. We should be working as actively as we can to use taxpayers' money for good rather than giving tax breaks to people who buy enormous super utes.

Luke Howarth (Petrie, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

In relation to the amendments from the member for Warringah: as much as I think the instant asset tax write-off should be lifted much higher, the reality is that, leading into this election, we have to have all our costings put up front. We want to make sure our budget is better than the current government's, and that's why we decided to lift it to $30,000 and make it permanent. As a former small-business owner and a former contractor, and someone who worked in trades for 15 years, I understand the value of the instant asset tax write-off; I think a lot of the coalition do.

In relation to the member for Kooyong, I've got no idea what she's talking about. An attack on tradies wanting to use utes? You've got to be kidding me! I used to run a pest control business and I had nine pest controllers, and every single one of them had a dual cab ute or an extra cab ute that they used for work. If they take their family off in that dual cab ute on the weekend, off to lunch or something—you want to reduce that; is that right? Is that what you want to do for the people of Kooyong and right around Australia? The ute is a genuine tax deduction, and I can guarantee you one thing: if I'm Assistant Treasurer we won't be getting rid of tax-free thresholds and any sort of deduction on utes, that is for sure. I challenge the member for Kooyong to go out and talk to the tradies in her electorate—or perhaps we'll get Amelia Hamer to go out and talk to the people in her electorate. It's an outrageous suggestion. It is a slur on everyone who drives a ute to say, 'This is some sort of tax dodge to have a ute.' It just shows how out of touch some of these members in this place are. That is definitely one of the worst amendments I've seen in 12 years in this place. That someone would stand up and say something like that is a slur on every tradie, every bricklayer, every builder and every person that works in the offices for those companies. It's wrong.

Zali Steggall (Warringah, Independent) Share this | Link to this | Hansard source

Noting the comments of the opposition, I ask the minister, in terms of what costings and calculations have been made by the government—and, ironically, I would say, the opposition as well, if they're willing to share—why the decision is to leave the test at $20,000 or even the $30,000 proposal, not the $50,000 asset write-off being requested by COSBOA and all industry groups as the meaningful threshold that would in fact raise productivity and assist businesses. It shouldn't be just a question of picking numbers that are politically convenient to one side or the other. It would be useful for the industry and small businesses to understand the reason for the calculation of the $20,000. The very point of it is that it's meaningful for small businesses. The $20,000 does not allow for putting solar on your roof or for putting in a battery or getting efficiency and sustainability within operations—

Maria Vamvakinou (Calwell, Australian Labor Party) Share this | Link to this | Hansard source

The debate is interrupted in accordance with standing order 43. The debate may be resumed at a later hour, and the member will have leave to continue speaking when the debate is resumed.