LABOR LINES: Small businesses suffer

Unfortunately, for businesses in Australia, especially small businesses, red tape has come back with a vengeance.

Instant Asset Write-Off is not the most exciting-sounding term you will hear in business or politics.  

Hearing the four words hardly sets the blood pumping with excitement.

But for many people running small businesses, it is crucially important – and, unfortunately, signifies a backward step taken since the 2013 Federal Election.

During the last Labor Government, the Instant Asset Write-Off maximum was $6,500.

In plain English, what this meant was that business purchases of items up to this amount could be included as a tax deduction in that year.

So, if a builder bought a computer for $1,001, it could be deducted immediately.

If a coffee shop owner bought a fridge for $4,000, it could counted as a tax deduction straight way.

If a piano teacher bought a piano for $6,000, it could be claimed as a business expense in full.

This was sensible stuff.  Money spent on running your business was able to be counted as a business expense instantly.  Pretty obvious.

Of course, there had to be a cut-off and Labor had increased the threshold for the Instant Asset Write-Off to $6,500.  I only heard praise for this policy from small businesses in 2013.

Any items purchased that cost more than $6,500 were still able to be counted as business expenses, but the deductions would be spread over a few years through a depreciation schedule.

For some inexplicable reason, the Government has decreased the threshold for the instant asset write-off to $1,000.

So that means the builder with the new computer will not be able to claim $1,001 for that computer; same with the coffee shop owner with the fridge and the piano teacher with the piano.  

This decision actually costs small business money and time.

Money because the small business is out of pocket anyway, but can’t claim the full amount instantly – so the small business is out of pocket for longer than was the case previously.

Time because the small business now has an extra workload – to manage a depreciation schedule for a relatively small item.

Red tape is the only way to describe this.  More paperwork, less money.

It is just disappointing. Disappointing for the small businesses.

And, given that small business is where most of the jobs are in Australia, it is disappointing for the current and potential workers. 

Our Government should be trying to make life easier for small business. Not harder.  

We were promised less red tape. Another broken promise.

Michael Pilbrow.