The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Wayne Swan

Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

18 June 2013

Small businesses have 13 days to benefit from new tax reforms this financial year

Joint media release with
The Hon Gary Gray AO MP
Minister for Small Business, Tourism, Resources and Energy
and
The Hon Bernie Ripoll MP
Parliamentary Secretary for Small Business

Australia's 3.2 million small businesses have 13 days left this financial year to make investments in their business that will enable them to access generous tax deductions introduced by the Gillard Government.

The Gillard Government understands the importance of cash flows and simplified tax laws to help small businesses get ahead. This is why we have made a number of taxation reforms worth $5.2 billion to help small business invest and grow their business. 

Small businesses that invest in new equipment this financial year will be able to claim an immediate deduction in this year's tax return under Labor's $6,500 instant asset write-off.

Those businesses buying assets costing under $6,500 can deduct the full amount against income earned this year, which will ease the burden of bookkeeping having to depreciate assets over a number of years.

The Gillard Government has also simplified depreciation arrangements for assets costing $6,500 or more. These businesses can depreciate these assets in a single pool, claiming 15 per cent in the first year and 30 per cent each year after.

In addition, small businesses purchasing a motor vehicle will be able to claim an immediate deduction for the first $5,000 before depreciating the rest in the single depreciation pool.

For example, a small business that purchases a ute for $20,000 by June 30 will be able to deduct $7,250 in this year's tax return. If they also bought machinery worth $5,000 they would also receive an immediate deduction of the full amount, enabling them to claim $12,250 in tax deductions in the first year and access cash sooner. Under the previous rules, this business would only have been able to deduct $3,750 in the first year.

Finally those companies in a loss position will still be encouraged to invest to help grow their business through the Government's loss carry back initiative. 

Companies that do not have enough in income will be able to carry back up to $1 million of these deductions against profits made in the previous tax year and receive a refund of up to $300,000 each year from tax previously paid.

These meaningful reforms were made by the Gillard Government.  Many of these reforms were recommended in Australia's Future Tax System Review to encourage investment and innovation is Australia's small businesses, the engine room of the Australian economy.

If elected, the Coalition have promised to unwind a number of these reforms, reverse these tax cuts for small businesses and increase red tape.

The Australian Taxation Office has put out guidance for small business on the instant asset write-off and simple deprecation measures on the ATO website.