Small businesses will be able to immediately write off assets worth up to $20,000 as part of the Abbott government’s efforts to encourage them to spend more and grow their operations.
The move is part of a $5.5 billion package aimed at boosted the 96 per cent of Australian businesses with an annual turnover of less than $2 million a year.
Under the change, small businesses can claim a tax deduction for the full value of assets worth up to $20,000 in a single year, rather than over five years as had been the case.
That could include things like cars, kitchens, machinery, computers and tools, the government says.
The company tax rate for incorporated small businesses will also fall from 30 per cent to 28.5 per cent, with unincorporated businesses receiving a five per cent tax discount of up to $1,000.
Treasurer Joe Hockey said the changes will allow small businesses, which he described as the engine room of the economy, to spend more on expansion.
“This will be of enormous benefit to their bottom line and help businesses with their cash flow,” Mr Hockey said.
“It means innovation. It means jobs. It means more money to invest and grow your business.”
The government is also changing Fringe Benefits Tax rules to allow for tax exemptions on multiple portable electronic devices such as smartphones and tablets.
Under existing rules, tax exemptions were only provided for one device.
And the government has announced it will provide capital tax relief to small businesses who change their legal structure, without changing ownership.