Small business owners across Australia are expressing their frustration over the delay in passing key legislation intended to support investment and job creation. The Australian Small Business and Family Enterprise Ombudsman, Bruce Billson, speaks out on the slow progress of vital incentives.

Delayed legislation and expiring incentives

The legislative delay has left small businesses with minimal time to take advantage of the Small Business Energy Incentive and the new $20,000 threshold for the Instant Asset Write-Off. Both incentives were part of the Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Bill 2023, initially announced over a year ago.

“With just days to go before the end of the financial year, Federal Parliament last night finally passed two pieces of legislation from the 2023 Budget that were announced more than a year ago and will expire on 30 June,” Billson stated.

Impact on small businesses

Billson emphasised the impracticality of expecting small businesses to act swiftly on these incentives. Billson said the compressed timeline undermines the purpose and value of the incentives, which were designed to encourage significant investments in electrification and energy efficiency

“It’s absurd to think a small business can evaluate options, get advice about whether a possible investment is eligible for the incentive, confirm that stock and installation help is available, now buy, install and be using the equipment in line with the rules by 30 June,” he said.

Call for new safeguards

To prevent similar situations in the future, Billson has called for new safeguards to give small businesses at least six months to utilise government incentive schemes effectively.

“Small businesses need time to know the announcement has become law, so they can confidently plan in a sure-footed way for important investments that uplift the capacity, the productivity, and drive innovation in their business,” he explained

The energy incentive and its benefits

The Small Business Energy Incentive offers a bonus 20 per cent depreciation for businesses with a turnover below $50 million, aiming to help them save on energy bills by upgrading to more efficient systems. This includes electrifying heating and cooling systems, upgrading to energy-efficient fridges and induction cooktops, and installing batteries and heat pumps.

“The Government said the $314 million scheme had been ‘specially timed’ to help small businesses lay the foundations for their future growth,” Billson noted. However, Billson says the delayed passage has left little time for businesses to act.

Concerns over effectiveness

Billson expressed concern that the limited timeframe might mean only those businesses already planning energy efficiency upgrades will benefit from the tax deduction. “I’d hate to see economists questioning the value of these settings because they’re only rewarding behaviour that otherwise would have happened anyway,” he remarked.

Instant asset write-off changes

The Instant Asset Write-Off, which resets to $1,000 annually unless new legislation is passed, was increased to $20,000 for eligible small businesses in the May 2023 Budget. This increase is intended to encourage small businesses to invest in new equipment and technology, bolstering their capacity and future readiness.

“We need to give more encouragement for people to turn an idea into an investment,” Billson said, highlighting the importance of these incentives in driving economic growth.

Billson stressed the need for Parliament to provide small businesses with the certainty and time required to incorporate legislative changes into their planning.

“Small businesses need to be able to trust Parliament to give them enough time to understand changes and with certainty factor them into their planning,” he concluded.

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