The federal government has handed the private sector a $700 million boost, in the form of an expanded instant asset tax write-off scheme for small business.
In an address to the nation on Wednesday night and a follow-up press release, Prime Minister Scott Morrison revealed that as part of the government's $17.6 billion 'economic plan' to stave off recession, the instant asset tax write-off will migrate from a $30,000 ceiling for the asset to as much as $150,000.
Furthermore, eligible businesses are no longer limited to those with an annual revenue of $50 million or less. The revised tax write-off will now be offered to businesses earning up to $500 million a year.
Revision opens up options for businesses in need of a new commercial vehicle
According to the government, the revised tax write-off – available until June 30, 2020 – opens up numerous options for businesses in need of a new commercial vehicle, which could include a new tractor for a farm, earth-moving equipment or heavier vans and light trucks for haulage.
In addition, the government is also setting aside $3.2 billion for a time-limited (15-month) investment incentive, providing businesses the opportunity to claim a further 50 per cent depreciation of the asset cost during the year of purchase. This offer ends June 30, 2021.
"Our targeted stimulus package will focus on keeping Australians in jobs and keeping businesses in business so we can bounce back strongly," the Prime Minister was quoted as saying in the press release.
The economy needs temporary help right now to bounce back better so the livelihoods of all Australians are protected.
Treasurer Josh Frydenberg revealed in the press release that international credit rating agency Standard and Poor's had approved of the plan, stating that it would be 'unlikely to strain Australia’s creditworthiness'.
Supporting Australian businesses and their employees through economic challenges
"Today’s announcement will provide the support businesses need to stay in business and keep Australians in a job," Frydenberg also said.
"By acting decisively this package will put Australia in the strongest possible position to deal with the economic challenges we face and to make sure our economy bounces back even stronger."
The stimulus package attempts to address challenging economic headwinds that threaten two quarters of negative growth, a technical recession, for the Australian economy. These headwinds include stagnant wages growth over a period of years, wilting consumer sentiment, a credit squeeze, disastrous bushfires and now the coronavirus ('covid-19'), which have combined to place the Australian economy in a precarious position.