Small businesses will benefit from a complete asset write-off extension.

man holding a pen

New changes proposed in the federal budget will provide "a fairer go" to small firms in tax debt disputes with the ATO. Meanwhile, the complete asset write-off and loss carry-back programs have been given one-year extensions. Let's take a look at what's going on.

In this year’s government budget for pandemic recovery, there’s a lot to take in.

So, for today, we’ve decided to focus on only a few significant budget items that we believe would aid SMEs in managing their finances and debt in the years ahead.

Full asset write-offs and loss carry-back extensions on a temporary basis

Small firms who want to invest in their future will be relieved to learn that they can write off the full cost of assets purchased until June 30, 2023.

The popular ‘temporary full expensing’ method is a more comprehensive variant of the popular quick asset write-off scheme.

It permits large and small firms to write off any qualifying depreciable asset at any cost until June 30, 2023.

This can help you increase your cash flow by allowing you to reinvest funds into your company more quickly.

In addition, the federal government’s ‘loss carry back’ provision has been extended until June 30, 2023.

Small Firm Ombudsman Bruce Billson explains, “This is a tax policy that effectively permits a small business to carry back tax losses from the 2022/23 income year to offset previously taxed gains as far back as 2018/19, to promote business recovery.”

During conflicts, a third umpire will halt ATO debt collection actions.

When a debt is contested, small businesses will soon be able to petition to the Administrative Appeals Tribunal (AAT) to stop or alter ATO debt collection procedures.

“Small businesses disputing an ATO debt in the AAT will have a better chance since the ATO will not be able to aggressively pursue debt recovery actions against them while the matter is being heard,” Mr Billson adds.

Small firms can currently only halt or alter ATO debt collection efforts through the court system, which can be costly and time-consuming.

“Small businesses can save thousands of dollars in legal fees and up to two months waiting for a ruling under the proposed changes,” Mr Billson adds.

Until the disagreement is decided, the AAT will be entitled to postpone or alter ATO debt recovery actions such as garnishee notifications, interest charges, and other penalties.

Mr Billson explains, “It means that instead of wasting time and money litigating in court, small company owners can focus on what they do best – running and expanding their firm.”

Please contact us if you require funding for your company.

While it’s great that the AAT is delaying ATO debt collection rather than the courts, the truth remains that many small businesses will still have to pay their ATO debt.

So, if the ATO is pursuing a tax debt from your company, contact us to talk about financing possibilities for paying it off faster and providing you some breathing room.

If we go back to the beginning of this post, being able to write off assets quickly is great, but if you don’t have the finances to purchase them, the ‘temporary full expensing method’ won’t help you much.

So if you’d like help obtaining finance to make the most of temporary full expensing for your business – whether it’s this financial year or next – reach out to us today.

To learn more, contact Premium Finance Group Australia at (07) 4720 8888 or email us at finance@pfga.com.au

Disclaimer: The content of this article is general and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your situation and may not be relevant to circumstances. Before taking any action, consider your particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced, or republished without prior written consent.

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