63% of Australian SMEs took benefit of the uncapped Prompt Asset Write-Off Scheme within the final monetary 12 months, earlier than the graduation of the revised restrict of $20,000 per asset.
The headline discovering is contained in the newest SME Development Index Report by ScotPac, Australia’s main non-bank enterprise lender.
Since its introduction greater than a decade in the past, the Prompt Asset Write-Off (IAWO) Scheme has allowed eligible companies to say a direct tax deduction for the acquisition of varied belongings, as much as a specified threshold.
On the outset of COVID-19, the Federal Authorities elevated the IAWO threshold from $30,000 to $150,000 to make it simpler for small companies to learn from asset purchases. It later eliminated the cap fully by introducing short-term full expensing.
With the Albanese Authorities committing to a revised IAWO threshold of $20,000 per eligible asset for 12 months from 1 July 2023, SMEs ramped up their use of the scheme as within the lead-up. Notable findings from the SME Development Index report embody:
- The typical quantity spent by SMEs that used the IAWO scheme in FY23 was $91,500.
- SMEs with declining or flat development have been the most important customers of the scheme with 68% buying eligible belongings, in contrast with 59% of development SMEs.
- 75% of NSW / ACT SMEs used the IAWO scheme, in contrast with simply 54% of WA SMEs.
ScotPac CEO, Jon Sutton, stated the IAWO scheme has been a significant component in SME choice making on capital expenditure lately.
“There is no such thing as a doubt the Prompt Asset Write-off Scheme has achieved its goal of encouraging SMEs to put money into belongings to assist develop their enterprise,” Sutton stated.
“In uncooked numbers, a whole bunch of 1000’s of SMEs have been in a position to declare tax aid price billions of {dollars} for belongings bought in 2023-24.
“When you think about the rising prices confronted by all companies in that interval, together with the price of crucial belongings, the Prompt Asset Write-off scheme has supplied an amazing enhance for SMEs,” Sutton stated.
Underneath the present IAWO threshold, a $20,000 cap applies on an asset-by-asset foundation. Belongings valued at greater than $20,000 are positioned into the small enterprise depreciation pool and depreciated over a number of years.
Sutton stated whereas there was comprehensible disappointment that the short-term full expensing measure had ceased, the present IAWO scheme nonetheless supplied incentives for SMEs to put money into capital.
“Common capital expenditure ranges for SMEs are persevering with to develop,” Sutton stated.
“Many SMEs are utilizing Asset Finance and different working capital options as leverage to buy new tools and benefit from the tax concessions nonetheless on supply.
“Whereas current modifications to the scheme have eliminated the instant tax profit for bigger objects, the $20,000 per asset cap nonetheless gives alternatives for SMEs seeking to develop or improve their asset base,” Sutton stated.
Sutton inspired SME house owners, CFOs and Procurement Managers planning to put money into new belongings to speak their dealer about ScotPac’s versatile Asset Finance help that may prolong to 100% of the price of new tools.
