OnDeck research shows only one in four small firms are claiming the instant asset write-off
With the end of the financial year approaching, new research from OnDeck Australia indicates that a significant number of small businesses may be missing out on a valuable tax deduction.
According to the survey from the SME lender, only 26% of small enterprises nationwide are currently claiming the instant asset write-off (IAWO), a federal tax incentive designed to support small business investment.
The IAWO enables businesses with an annual turnover under $10 million to immediately deduct the cost of eligible assets costing up to $20,000, rather than spreading the deduction over several years.
Despite the potential tax benefits and improved cash flow, 36% of businesses said they are not using the deduction, while another 38% were unsure whether they were accessing the scheme.
“This should be a wake-up call for the nation’s small business community,” said Cameron Poolman (pictured above), chief executive of OnDeck Australia. “With only weeks remaining in the current financial year, there is still time for eligible businesses to make a strategic purchase and reduce their taxable income. But the asset must be in place by June 30 this year to claim the IAWO.”
Poolman said that the IAWO can support productivity by encouraging investment in business equipment such as tools, vehicles, and office supplies. It may also help firms expand their service offerings or upgrade customer-facing facilities.
“Moreover, the IAWO reduces a small business’s taxable income, driving a reduction in the company’s annual tax bill,” he said. “This can free up funds for investment in other areas of the business such as marketing, research, or staff development.”
OnDeck’s earlier research suggests that access to finance could play a role in increasing uptake, with 18.3% of small business owners saying they would use extra funding to upgrade assets or facilities.
“With only weeks to go before June 30, I encourage small businesses to speak with their tax adviser to understand if they would benefit from the IAWO in the current financial year,” Poolman said.
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