Central West farmers to gain from lifting of tax break on asset write-off

More tax benefits for Central West farmers and small businesses

It’s good news, but it should be permanent.

That is the reaction in the Central West to the news that the Federal Government will lift the tax break on asset write-offs from $20,000 to $25,000.

It means that if small businesses buy an asset for up to $25,000, they can write off the business portion in their tax return for the relevant income year.

The new exemption will be in place until mid-2020.

This is the third extension for the exemption.

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Orange-based certified financial planner, Russell Tym, says businesses with turnover of less than $10 million will benefit from the decision.

“They will be able to buy equipment of up to $25,000 plus GST. So if it is new equipment, they can spend up to $27,500,” Mr Tym said. 

He said farmers can buy a myriad of items such as quad bikes, small pieces of farm machinery, pumps, new yards and sheds, whereas tradespeople can go for things like concrete mixers, welders, trenchers, forklifts and hoists.

“Small factories would be able to buy a huge variety of components to improve productivity and efficiency,” he said.

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MAKE IT PERMANENT: Western NSW Business Chamber regional manager Vicki Seccombe is asking the Federal Government to make the tax break permanent. Photo: FILE

MAKE IT PERMANENT: Western NSW Business Chamber regional manager Vicki Seccombe is asking the Federal Government to make the tax break permanent. Photo: FILE

Western NSW Business Chamber regional manager, Vicki Seccombe, said the Federal Government decision will stimulate business investment across the region. 

“We appreciate the extension to 2020, but we believe the instant write-off should be permanent – it would provide greater certainty, encourage business investment and help our businesses to safely plan ahead,” Ms Seccombe said.

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Mr Tym also believes that the tax break should be made permanent.

“The [Federal] budget is coming back into surplus two years ahead of schedule so we could afford to make the deductions on $20-25,000 permanent,” Mr Tym said.

“These deductions do put cash back in the pockets of small business people sooner, which means they will be more likely to think of expanding and employing more people sooner.”

These deductions do put cash back in the pockets of small business people sooner which means they will be more likely to think of expanding and employing more people sooner

Russell Tym

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There have been recommendations in the past that the tax break ceilings should be increased to $100,000 as the current limit is too low for capital-intensive businesses like manufacturing and farming.

“Increasing the deduction to $100,000 would be nice and certainly be welcomed by businesses that use larger equipment,” Mr Tym said.

Ms Seccombe said the Federal Government should also look at indexing the amount that can be written off.

This story More tax benefits for Central West farmers and small businesses first appeared on Western Advocate.