Both major parties have been accused of playing “dumb” politics as a significant policy designed to benefit millions of small businesses remains stuck in the House of Representatives.

The amendment to the instant asset write-off provision for small businesses would increase the tax break amount from $1,000 to $20,000 — with the aim of boosting cashflow and reducing compliance costs.

When the ABC spoke to Tasmanian cafe and hotel owner Rachel Power earlier this month about the higher threshold, she was looking forward to being able to replace the dishwasher and fridges in her industrial kitchen.

But with the bill still yet to pass Parliament, and a June 30 deadline before the current tax break expires, Ms Power told the ABC yesterday that it was too late for her to benefit from last year’s budget promise to lift the threshold.

“[Even] if this gets legislated within the next four weeks, it’s too late,” said Ms Power, who runs Waterfalls Cafe and Gallery in Tasmania’s Mt Field National Park. 

Waterfalls Cafe and Gallery is in Tasmania’s Mt Field National Park.(Supplied: Discover Tasmania)

The instant asset write-off has been available to small businesses for years, but many owners have told the ABC the current limit of $1,000 is hardly worth the effort of claiming.

But a $20,000 limit could make a big difference.

The way it works is that a business can buy something, such as a coffee machine, and the owner can deduct the cost of that machine from the business’ taxable profit.

But they need to use the asset immediately after the purchase to be eligible.

“And they need the ability to actually get the product,” Ms Power explained.

“If we’re talking $20,000, some of those products might have to come in from offshore and might not be available in Australia.”

Bill bouncing around Parliament

The bill, known as the Treasury Laws Amendment Bill 2023, was introduced to Parliament in September last year — four months after the federal budget announcement.

It has now bounced between the Senate and the House of Representatives several times.

The sticking point? Coalition and Greens MPs in the Senate want to increase the asset price threshold to $30,000.

“Small businesses, the backbone of our communities right across Australia, are buckling under the weight [of] repeated interest rate hikes — 12 since Labor came to power,” Shadow Treasurer Angus Taylor told the National Press Club in Canberra on Wednesday.

Shadow Treasurer Angus Taylor speaking at the National Press Club. (ABC News)

Labor, concerned about fuelling inflation, insists the asset threshold needs to remain at $20,000.

A spokesperson for Treasurer Jim Chalmers told the ABC “the only thing standing between small businesses and cashflow support this financial year is the grandstanding and delaying tactics of the opposition and crossbench”.

“Unless they urgently pass the legislation in the upcoming sittings, businesses may miss out on this important cashflow support when they lodge tax returns from July 1,” the spokesperson said.

The ABC understands the Coalition now plans to ultimately agree to the government’s $20,000 asset threshold.

But the houses are not due to both sit again until the final week of June, meaning the earliest the bill could be passed would be one or two days before it expires.

That will be too late for many business owners.

“It was announced and it was adopted in the [federal budget] but it hasn’t been legislated, so as a business owner I don’t have time to spend looking at the ins and outs of the politics of every little decision,” Ms Power said.

Small businesses ‘need certainty’

Small Business Council CEO Luke Achterstraat said Ms Power spoke for many small businesses across the country.

“Quite frankly, I think small businesses are a bit over it,” Mr Achterstraat said.

“They’d like to see certainty but they’d also like to see that certainty locked in.”

Luke Achterstraat says small businesses need certainty.(The Business )

Angus Taylor said the Coalition would deliver a permanent instant asset write-off if elected to government.

“Our commitment in this budget reply is to make this instant asset write-off permanent,” he said.

“And that’s a down payment on our priority of lower, simpler, fairer taxes.

“This will simplify depreciation for 2.5 million small businesses across Australia while giving them the certainty that they can plan investments on a longer-term basis rather than year to year.”

But veteran budget commentator Chris Richardson said neither side of politics was courting favour with this policy and argued that, frankly, they had stuffed up the politics.

Leading economist Chris Richardson has condemned both major parties for “playing games”.(ABC News: Daniel Irvine)

“Political gridlock and political games doesn’t help anybody,” he said.

“In Australia, we lack bipartisanship to do things that should be done.

“This isn’t the worst example but it’s a dumb example. We can and should do better.

“So you want to give people a chance to respond to this policy.

“And to run it down to the wire … messes up good decision-making by small business.”

This year’s federal budget offers to extend the $20,000 instant asset write-off for another 12 months but, again, that would require an amended bill to pass Parliament.

Given the serious concerns about inflation, it is arguable the political stalemate has prevented an economically fraught surge in business spending.