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

I move:

(2) Schedule 7, page 132 (line 1) to page 132 (line 13), omit the Schedule, substitute:

Schedule 7 — instant asset write-off for small business entities

Income Tax (Transitional Provisions) Act 1997

1 Section 328-180 (heading)

Omit "to 30 June 2025".

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 of the year occurs on or after 12 May 2015.

3 Subsection 328-180(4)

Omit "Temporary increase", substitute "Increase".

4 Paragraph 328-180(4)(d)

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

5 Paragraph 328-180(4)(d)

Omit "and on or before 30 June 2025" (wherever occurring).

6 Paragraph 328-180(5)(e)

Repeal the paragraph, substitute:

(e) were a reference to $50,000, if the amount is so included at any time on or after 1 July 2023.

7 Paragraph 328-180(6)(e)

Repeal the paragraph, substitute:

(e) were a reference to $50,000, in relation to a deduction for an income year that ends on or after 1 July 2023.

This amendment is in relation to schedule 7, in relation to the instant asset write-off, which was first introduced as a stimulus measure some years ago. It is a practical way to boost cash flow and support investment, but, over the years, it has become a vital business planning tool. The problem is there's no ability for business to actually plan with this tool because there is no consistency. Each year it's implemented it is prey to politicking and becomes a political football. And it has changed over time. Usually it is for a limited time, and the thresholds keep changing. It's now at $20,000. When it was originally introduced, it was actually $150,000, but now it's back to $20,000 and is drip fed with the legislation every 12 months to extend the measure.

The amendment I move is to make this instant asset write-off permanent so that businesses can in fact have the certainty of knowing they can invest in their business, in innovation and efficiencies, ahead of time. The amendment increases it to an amount that is actually meaningful for small businesses to allow them to actually invest and boost their productivity. We know that nearly four million small businesses rely on this, and they want this. They want this to be at the $50,000 mark, and they want it to be permanent.

According to MYOB, who assist so many small businesses, nearly 60 per cent of small business would support a permanent instant asset tax write-off because the uncertainty undermines the confidence small businesses need to invest in their business. So if the government were genuine in their desire to assist small business, it would accept this amendment, because we have been calling on the government to make this instant asset write-off permanent for sometime. In the last two parliaments, we've seen this kicked around like a political football, and the people paying the price are small businesses. They are the ones who cannot invest in their business with certainty because they don't know whether the legislation will ultimately pass. In the last term of parliament, it passed on pretty much the very last sitting day, which was only a short period of time before the end of the financial year and which meant there was no ability for a business to genuinely look to this measure to invest in their business and boost their productivity.

There is a high-stakes roadmap. At a time when Australia needs policy settings that help to boost productivity and growth, we should be looking at ways to enhance investment by local businesses. The proposal to extend this doesn't provide the certainty that businesses need. When the amendment was before the House in the 2023-24 financial year, leading professional bodies, including the CPA, the Tax Institute of Australia and the Mortgage and Finance Association of Australia, all called for the instant asset tax write-off measure to be made permanent. Permanency would reduce red tape for business, government and tax agents. While the government deserves credit for continuing the scheme, it's time to stop treating this as a temporary fix. Small businesses need long-term certainty.

Also, the current $20,000 threshold does not provide the economic stimulus needed for small businesses to have confidence to grow and invest. That's why my amendment seeks to make the instant asset write-off permanent and increases the threshold to $50,000 so that businesses have got a meaningful ability to invest in their businesses. I commend the amendment to the House.

Andrew Gee (Calare, Independent) Share this | Link to this | Hansard source

I rise to support the amendments proposed by the member for Warringah, and I commend her for bringing these very important changes and amendments to the House. It is no secret that small businesses have been doing it very tough right around Australia but particularly in country Australia. There are high interest rates, high energy costs, inflation and too much red tape. There is red tape seemingly at every level of government. There's the stress that our small-business people experience of having to borrow money and lie awake at night hoping that they will be paid so they, in turn, can pay someone else.

It is not easy being in small business, yet our small-business people are key to driving jobs, prosperity and growth in the regions and right around the country. The instant asset write-off is a very important measure to support our small-business people. It enables our businesses to make key investments to keep their businesses thriving, which has been very difficult lately, but it could be made better. This is what the member for Warringah has put to this House. She wants to improve this key piece of legislation and this key measure for small business.

At the moment, as members such as the member for Wentworth have eloquently pointed out to this House, the instant asset write-off has been a year-to-year proposition. Businesses have not had certainty that the instant asset write-off will be there from one year to the next. Because of delays in the implementation and the passing of legislation relating to the instant asset write-off, it has meant that some businesses just haven't been aware of it. Some businesses have missed the opportunity to take advantage of it. So it should be made permanent. By making it permanent, it allows businesses to plan their investment decisions. It would allow them to steer by the stars instead of navigating by the lights of each passing ship, and that certainty is a very important thing for small businesses right around the country. So I'm very supportive of that measure in the amendments.

I'm also very supportive of actually extending the instant asset write-off and increasing it to $50,000. This will allow more businesses the flexibility to make larger investment decisions and receive the tax benefits that the instant asset write-off brings. It will drive more growth and more investment and will actually help our businesses thrive. I'm very supportive of the amendments. I commend them to the House, and I implore all members of this place to get behind the amendments and back our small businesses—the engine room of the Australian economy.

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

The question is that amendment (2), put forward by the honourable member for Warringah, be agreed to.

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

by leave—I move amendments (1) and (3) as circulated in my name together:

(1) Clause 2, page 2 (table item 9), omit "Schedules 6 and 7", substitute "Schedules 6 to 8".

(3) Page 99 (after line 15), at the end of the Bill, add:

Schedule 8

Income Tax (Transitional Provisions) Act 1997

1 At the end of section 328-180

Add:

Increased access linked to waste reduction or energy efficiency

(7) Despite any other provision of this Act, section 328-180 of the Income Tax Assessment Act 1997 applies in relation to:

(a) an increased access year beginning after 30 June 2025; and

(b) a depreciating asset between $20,000 and $50,000;

only if the depreciating asset would reduce waste or be covered by the energy incentive in section 328-465 if the appropriate change were made to that section.

In relation to the instant asset tax write-off, it's raising the question of how it is used for small businesses. In the past, there has been concern that the instant tax write-off has been used for, essentially, spending by some businesses—for example, the paying of the RAM tradie utes. We've seen them proliferate in some of our areas. So it's looking at the question of how small business can be incentivised to invest into energy efficiency and waste reduction, because these are key elements that the government ends up spending significant amounts of money on in other programs. So these amendments seek to justify the increase to $50,000 for that instant asset tax write-off by linking it to waste reduction and energy efficiency measures for small businesses. These come in so many ways that the write-off would essentially be available to most businesses and industries, but it gives small business that incentive and that encouragement to spend that money in a really purposeful way.

We know from the national climate risk assessment that small businesses across Australia will face notable impacts and increasing risks from climate change. They will potentially face compounding impacts from inundation, flooding and erosion, making them unviable, particularly in high-risk areas across Queensland, WA, the Northern Territory and New South Wales. Often, small businesses also struggle to get insurance because of the amount of risk they carry when it comes to climate impacts. So for small businesses there's a real benefit in being incentivised to act to reduce that risk and invest in those efficiencies for their buildings and in the ability to act now to protect their energy sources and ensure they can build resilience in their business and continue to operate in the face of rising temperatures and increasing risks.

So these amendments would incentivise small businesses and deliver real benefits by allowing small businesses to invest in energy efficiency and decarbonisation options to reduce the costs of doing business. For example, the cost of utilities is a key driver of stress for small to medium enterprises. The amendments would allow for investment in productivity enhancement, and they would simplify tax compliance, removing the confusion of annual threshold changes.

I urge the government to consider: if not through these amendments, how, through other measures, do we incentivise small to medium businesses to innovate and to build resilience within themselves? We need to ensure that they have access to ways to build energy efficiency in their operations but also to build waste management. We know we need to build towards more of a circular economy and ensure that that waste management is there.

I've had the privilege of spending time with small businesses within my electorate. They're ambitious, hardworking and innovative. They deserve tax frameworks that reward innovation and support cleaner, more efficient technologies. Under the current arrangements, it shifts every budget cycle, which risks missing the opportunity to help small businesses be part of the clean energy transition. With better design, the instant asset write-off can be a powerful tool towards our national decarbonisation efforts and lifting productivity through small businesses. So these amendments, like others, support both business growth and Australia's long-term economic resilience. It's about providing certainty and fairness, not shifting goalposts. So I commend these amendments to the government and urge the government to consider much greater support for small to medium enterprises.

Question negatived.

Bill agreed to.