(Australian Associated Press)
Businesses will be able to access the $150,000 instant asset write-off scheme until the end of the year, in a bid to help them rebound after coronavirus.
Treasurer Josh Frydenberg says the extension will cost $300 million and is expected to help about 3.5 million businesses.
“(They) will be able to go and purchase equipment or machinery, tools, up to a value of $150,000 – as many times as they want – and then write it off,” he told reporters just outside of Canberra.
“We’ve been through some difficult times but the nation has made great progress.
“We’ve flattened the curve and people are getting back to work, and we want businesses to get back to doing what they do best – growing, innovating and hiring people across the economy.”
Labor supports the move but is waiting to see the underpinning legislation, which will be introduced to federal parliament this week.
“While measures to help reverse the collapse in business investment are desperately needed, the Morrison government has poorly timed and badly implemented this policy from day one,” shadow treasurer Jim Chalmers said.
“Scott Morrison and Josh Frydenberg failed to act when business investment was crashing in the months before the fires and the virus, and then announced this policy just before shutting down large parts of the economy.”
The expanded instant asset write-off took effect in March and applies to businesses with annual turnovers of up to $500 million, up from $50 million.
Assets can be new or second hand, and must be used or installed by December 31.
Businesses can benefit from the instant asset write-off multiple times.
Figures released by the Parliamentary Budget Office on Tuesday shows that in April the deficit was $40 billion compared to an expected $7.6 billion.
Net debt at the end of April was about $441 billion, which is $49 billion more than the most recent forecast for the end of the financial year.
Treasury secretary Steven Kennedy says the economic hit because of coronavirus will be smaller than initially expected because the health outlook has improved.
“However, this will still be the single biggest economic shock Australia has faced in living memory,” he told a Senate inquiry.
Mr Frydenberg last week confirmed Australia is in a recession, after the economy shrank 0.3 per cent in the March quarter ahead of a much larger fall expected in the current June quarter.
The pandemic could see government debt blow out by $620 billion by the end of the decade, the PBO has found.
Mr Frydenberg will provide a budget update on July 23.