Instant Asset Write Off
By way of introduction the Instant Asset Write Off (IAWO) has had a varied history in recent years from virtually no limit during the Pandemic years to $20,000 now but with great uncertainty attached.
It is considered to be one of the few useful economic stimuli that has been made available to business and is a very useful fiscal measure for business to counteract the sometime adverse monetary measures adopted by the reserve bank.
It was particularly helpful during the pandemic when the interest rates were already close to zero .
Here’s a brief comparison of the Labor government’s Instant Asset Write-Off and the Coalition’s Permanent Instant Asset Write-Off:
Labor Government’s Instant Asset Write-Off ($20,000 until 30/06/2025):
Under the Labor government, the Instant Asset Write-Off is designed as a temporary measure to support small businesses by allowing them to immediately deduct the cost of eligible assets up to a certain threshold. This aimed to stimulate economic activity and investment during challenging times. The program was subject to periodic changes and adjustments based on economic conditions. The decision to extend has been somewhat belated and seemingly ad hoc.
Coalition’s Permanent Instant Asset Write-Off (Proposed $30,000):
The Coalition government proposes a permanent Instant Asset Write-Off, aiming to provide long-term stability and predictability for businesses. By making the write-off permanent, businesses could plan their investments with greater confidence, knowing that they could consistently benefit from immediate asset deductions. This approach aimed to encourage continuous investment and growth among businesses.
Comparative Merits:
- Labor’s Temporary Measure: Offers flexibility and responsiveness to economic conditions but may create uncertainty due to frequent changes.
- Coalition’s Permanent Measure: Provides long-term stability and predictability, which can be beneficial for sustained business planning and investment.
Both approaches have their own strengths, depending on the economic context and business needs.