Expanded assets write-off scheme to help 3.4 million businesses invest and grow

Budget sweeteners for business include expanding the fast cash write-off scheme to an extra 22,000 companies, but Gustav Montagut would prefer red tape be slashed to benefit his dog exercise business.

• Budget spends big on schools, students and training
• $7.3b boost for NSW roads, rail projects
• Budget: The winners and losers

Small businesses will be able to immediately write off new assets that cost up to $30,000 with the 2019 federal budget announcing a boost to the scheme that will put cash back into the hands of the nation’s mum-and-dad employment powerhouses.

In a bid to create an election wedge with Labor, the Coali­tion will also include medium-sized businesses with a turnover up to $50 million in the scheme for the first time, forcing Opposition Leader Bill Shorten to argue why 22,000 businesses do not deserve tax relief.

Businesses will be able to immediately deduct purchases of eligible assets costing up to $30,000 — up from $25,000 — that are first used, or installed ready for use as of 7.30pm last night to June 30, 2020.

The measure will cost the Budget $400 million over the next four years.

It applies on a per-asset basis, so eligible businesses can instantly write off multiple ­assets. Treasurer Josh Frydenberg last night said all up the measure would help about 3.4 million small- and medium-sized business to reinvest in their operation, create jobs and grow.

MORE NEWS

Don’t let our son die in vain: Family’s plea for action

Aboriginal artwork delays 2o tonne boulder removal

$1m reward for information on horse trainer’s death

He said it would allow a cafe to get a new fridge or grill, a plumber to buy new tools or a courier a new van.

“Around 22,000 additional businesses employing around 1.7 million workers will now be eligible to access the instant asset write-off,” he said.

“This measure will improve cash flow for small and med­ium-sized businesses.

“We want small businesses to prosper, and we are backing them to do so — cutting their taxes to 25 per cent, increasing their access to finance with a new $2 billion fund, ensuring small business is paid on time.”

The Coalition also plans to bring forward tax cuts for small and medium-sized companies with turnovers below $50 million by five years.

Currently businesses with turnovers under $50 million pay a 27.5 per cent company rate, but this will be lowered to 25 per cent rate by 2021-22 if the Coalition is returned to government. Under the plan an incorporated food van business with four part-time ­employees that makes $150,000 per year would have an extra $3750 this year and $7500 in 2021-22 under the Coalition’s tax relief.

Mr Frydenberg also announced that the Coalition would pump an extra $3.4 million to increase participation for women and girls in STEM which complements the ­Future Female Entrepreneurs Program for 55,000 young women.

IT’S A DOG’S LIFE FOR SOME

Gustavo Montagut’s dog exercise business is straining at the leash and threatening to bolt clear. But the entrepreneur is struggling to get finance to expand his operation Fitness Dogs, and says red tape and regulations are making it more difficult for him to find premises where he can build his animal kingdom.

“We’re planning to open up a big play centre for dogs,” Mr Montagut, 31, said.

“It is going to be massive, with a pool, playground area and cameras so the customer can see what we are doing.”

Small business owner Gustavo Montagut with clients Bodhi left) and Ghost on a Harbour cruise. Picture: Toby Zerna

Mr Montagut wants the government to help lower his overheads, such as power bills
and fuel for the cars he uses to pick up and drop off his clients’ dogs.

He currently spends about $400 a week on each of the businesses’ three cars.

“It would be great if we could get a bit of help but at the moment we have to work it out like this,” he said.

The federal Budget’s boost of the small business write-off from $25,000 to $30,000 would give Gustavo help securing vehicles or playground items for his growing legion of canine customers.

FEAST OF CUTS BUT HOUSEHOLDS WILL ENJOY A VINTAGE WHINE

I should be having dinner with my wife right now.

That’s because it’s the first Tuesday of the month, our monthly Barefoot Date Night.

Instead, I’ve flown up to Australia’s fireworks and pornography capital (Canberra), and I’ve been locked up in a room full of the most distrusted ­people on earth — politicians.

The main buzzwords of this Budget are, broadly, “surplus” and “tax cuts”.

The Budget is finally back into surplus for the first time in 12 years.

Barefoot Investor Scott Pape. Picture: Jason Edwards

That’s largely thanks to a few free kicks from the rising prices of coal and iron ore.

But what does it mean to the average voter? Not much — and that’s the guts of the problem. The truth is the government doesn’t have the debt problem, our households do.

We have record-high levels of household debt at a time when interest rates are at ­all-time lows.

Yet the Budget papers paint a rosy prediction of growing surpluses over the next 10 years. Fact is, right now we’re facing the fastest downturn in housing prices since 1980. And, they’re unlikely to stop falling soon.

Which brings me to the second buzzwords of the Budget: tax cuts.

The government will provide cuts for low- and middle-income earners of up to $1080 for singles or $2160 for couples.

So what should you do with this political pork payment?

My suggestion would be to do what I’m not doing this evening. Go on a date night with your partner and set up your Barefoot buckets over a glass of wine.

The first item on the agenda?

Plastic surgery.

The average Aussie has $4400 in credit card debt.

According to calculations from PwC economics, if you were to put your $1080 straight off your never-never, you’d save $8448 just in interest, and pay it back 22 years earlier.

Now that’s a surplus turnaround to crow about.