Zali Steggall (Warringah, Independent) Share this | Link to this | Hansard source

by leave—I move amendments (1) to (19), as circulated in my name, together:

(1) Schedule 1, heading, page 4 (line 1), omit "$20,000", substitute "$50,000".

(2) Schedule 1, item 1, page 4 (line 6), omit "30 June 2024", substitute "30 June 2025".

(3) Schedule 1, item 2, page 4 (line 9), omit "30 June 2024", substitute "30 June 2025".

(4) Schedule 1, item 4, page 4 (line 15), omit "$20,000", substitute "$50,000".

(5) Schedule 1, item 4, page 4 (line 18), omit "30 June 2024", substitute "30 June 2025".

(6) Schedule 1, item 4, page 4 (line 21), omit "30 June 2024", substitute "30 June 2025".

(7) Schedule 1, item 5, page 4 (line 24), omit "$20,000", substitute "$50,000".

(8) Schedule 1, item 5, page 4 (line 27), omit "30 June 2024", substitute "30 June 2025".

(9) Schedule 1, item 6, page 5 (line 1), omit "$20,000", substitute "$50,000".

(10) Schedule 1, item 6, page 5 (line 4), omit "30 June 2024", substitute "30 June 2025".

(11) Schedule 1, page 5 (after line 4), after item 6, insert:

7 Review of instant asset write-off for small business entities

(1) The Minister must cause an independent review to be conducted of the operation of section 328-180 of the Income Tax (Transitional Provisions) Act 1997.

(2) Without limiting subitem (1), the review must consider how the operation of that section has helped small business entities.

(3) The persons undertaking the review must give the Minister a written report of the review by 30 June 2025.

(4) The Minister must cause a copy of the report of the review to be tabled in each House of the Parliament within 7 sitting days of that House after the report is given to the Minister.

(12) Schedule 2, item 1, page 6 (line 12), omit "$20,000", substitute "$50,000".

(13) Schedule 2, item 1, page 6 (line 14), omit "30 June 2024", substitute "30 June 2025".

(14) Schedule 2, item 1, page 7 (line 6), omit "1 July 2024", substitute "1 July 2025".

(15) Schedule 2, item 1, page 7 (line 11), omit "1 July 2024", substitute "1 July 2025".

(16) Schedule 2, item 1, page 7 (line 21), omit "30 June 2024", substitute "30 June 2025".

(17) Schedule 2, item 1, page 8 (line 28), omit "1 July 2024", substitute "1 July 2025".

(18) Schedule 2, item 1, page 9 (line 14), omit "30 June 2024", substitute "30 June 2025".

(19) Schedule 2, page 10 (after line 32), after item 1, insert:

2 Review of small business energy incentive

(1) The Minister must cause an independent review to be conducted of the operation of section 328-465 of the Income Tax (Transitional Provisions) Act 1997.

(2) Without limiting subitem (1), the review must consider how the operation of that section has helped small business entities.

(3) The persons undertaking the review must give the Minister a written report of the review by 30 June 2025.

(4) The Minister must cause a copy of the report of the review to be tabled in each House of the Parliament within 7 sitting days of that House after the report is given to the Minister.

These amendments are important to improve the intent and quality of this legislation. Don't get me wrong; it is a good bill. Two key provisions, nonetheless, require amendment. The instant asset write-off and the energy incentive will no doubt go a long way in assisting small businesses feeling the immense pressure of inflation, interest rates and less consumer spending, amongst other issues. Small businesses are the backbone of the Australian economy. They account for one-third of Australia's GDP and they need targeted support. At the moment small businesses are facing a perfect storm. At home, like all Australians, they are facing cost-of-living price increases and high mortgage rates, but they're also facing reduced revenue in their businesses as consumers spend less but energy prices increase. It's incredibly important that this bill actually achieve its intent by being well targeted. The amendments I am proposing, after consulting with the Manly Business Chamber, the Mosman Chamber of Commerce and the Warringah Chamber of Commerce in my electorate, and the Council of Small Business Organisations Australia—COSBOA—more broadly, give all small businesses certainty and bring forward cash, giving them the opportunity to get more back at tax filing time and allowing them more time to invest and reduce their energy bills.

In relation to the asset write-off, the amendments seek to increase the threshold for the instant asset write-off and the energy incentive bonus, taking the threshold from $20,000 to $50,000 respectively. Respectfully, for businesses to actually have the benefit of this provision, $20,000 is not sufficient. If we are talking about energy efficiency measures, whether it's rooftop solar, a battery, heat pumps and other efficiencies like LED lighting, these are all going to be much more significant than $20,000. If we genuinely want to support small businesses, it really needs to be increased to $50,000. Small businesses are struggling with their cashflows, and they really do need to do this. Nearly two-thirds of small-business owners recently cited concern about their ability to afford their energy bills. This incentive will go some way to help with that. I welcome the introduction of the energy incentive to support small businesses and to help them become energy independent and reduce their energy bills, but we need to make sure we're doing it in a meaningful way so that they can genuinely take advantage of this business policy.

The other issue, going to these amendments I seek to move, is this. Let's be realistic; we're already halfway through this financial year, and this is a measure to give small businesses the benefit of this asset write-off in the 2023-24 tax year. When I've raised this with COSBOA and small businesses they've asked me if I'm joking, in the sense that we're halfway through this financial year and we haven't even passed this legislation but, somehow, this is the period in which these businesses are supposed to be able to take advantage of this provision. Most of them aren't even aware this is coming. From a cashflow point of view, the government is proposing that sometime in the new year—so January or February—this legislation will have passed, businesses can become aware of it and they can then make the decision of whether or not they can take advantage of this asset write-off. But they have to do so within the next six months and find the cashflow to do it. I propose an amendment that I think is a very reasonable one to the government—that this measure be extended to the 2024-25 financial year so that businesses genuinely have an opportunity to plan for these measures and write off significant assets to improve the effectiveness and efficiency of their businesses.

If the government wants to be genuine in supporting small businesses in these kinds of measures and energy efficiencies, this amendment should be accepted, and this measure should be extended to the 2024-25 tax year. If not, it's really hard to understand where the motivation of the government is, other than window-dressing in this place for this measure and for this legislation, when so much of the time frame in which it will be available to the businesses has already passed. These are effective, simple amendments to genuinely help small businesses that are struggling and are calling on the government for greater assistance.

Helen Haines (Indi, Independent) Share this | Link to this | Hansard source

I rise to strongly support the member for Warringah's amendments to the Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Bill 2023. These are sensible, practical amendments, and they'd increase the positive impact of the small business energy incentive. They would give businesses more time and money to plan and undertake energy efficiency and electrification works. The amendments extend the deadline for projects to be completed from 30 June 2024 to 30 June 2025. The amendments also increase the maximum amount of the bonus deduction under the small business energy incentive from $20,000 to a far more realistic $50,000. Finally, the amendments require the minister to table a report to parliament no later than mid-2025 to assess the effectiveness of the small business energy incentive.

As a long-time campaigner for greater government support to businesses and households to electrify and improve their energy efficiency, I support the bill. It's a good bill, but it is one that can be so much better. I believe these amendments would significantly improve the effectiveness of the bill in genuinely reducing energy costs and emissions for small businesses. Getting this bill right is critical, as energy bill pressures increase and as Australia charts a path towards net-zero emissions.

There are almost 15,700 small businesses in my electorate of Indi that will be eligible for this incentive, and many business owners across Indi have spoken to me of the increased cost of doing business at this time. They're facing rising energy bills. They are a major factor in their business budgets. At the same time, these businesses want to play a role in reducing emissions. This bill can help them to both reduce their energy bills and reduce our overall emissions.

Yet, without an extension of the time line for completing projects, many small businesses will be too hesitant to begin an energy efficiency project or electrification project. They fear that their project won't be completed by the 30 June 2024 deadline. With just seven months until this deadline as it stands, this bill isn't practical. For most small businesses, planning a project, finding available tradespeople and completing the project within seven months just isn't realistic. Any delays could mean small businesses outlay project costs and then find they are not eligible for this support. Extending the deadline to 30 June 2025 gives businesses more time and more certainty that they'll be able to complete the projects within the eligible period.

Extending the deadline also allows for investments to be considered as part of long-term planning, which any business owner will tell you is necessary as they balance cash flow. Many business owners would see this and think, 'Great!' But then they may not be in a position to make such an investment right at this moment. Extending the deadline is needed to ensure the bill actually meets its objective.

Increasing the maximum available bonus deduction under the incentive from $20,000 to $50,000 will provide businesses with more flexibility to choose the project that is best suited to their situation and best sets up their business for the future. This might mean undertaking large-scale projects, such as completely electrifying their business operations. It could allow a supermarket, for example, to install sufficient batteries to endure blackouts without having to rely on generators. It could allow wineries or dairies to improve efficiency and resilience by insulating tanks and coolrooms.

Businesses are calling out for support to reduce their energy bills. This appetite for action is underlined by the number and diversity of projects across my electorate that sought funding under the recent energy efficiency grants for small and medium-sized enterprises.

The small business energy incentive is a fantastic opportunity to provide support to all small businesses, but the government needs to seriously consider these amendments put by the member for Warringah, because they will improve the effectiveness of the incentive. I strongly encourage the government to support these amendments.

Milton Dick (Speaker) Share this | Link to this | Hansard source

The question is that the amendments be agreed to.

Tony Pasin (Barker, Liberal Party, Shadow Assistant Minister for Infrastructure and Transport) Share this | Link to this | Hansard source

by leave—At the request of the member for Hume, I move opposition amendments (1) through (5) together:

(1) Schedule 1, heading, page 4 (lines 1 and 2), omit "$20,000 instant asset write-off for small business entities", substitute "$30,000 instant asset write-off for small and medium business entities".

(2) Schedule 1, page 4 (after line 2), after item 2, insert:

2A After subsection 328-180(3)

Insert:

Extension to medium business entities

(3A) If you are an entity covered by subsection (3B) for an income year, then for the purposes of doing any of the following:

(a) deducting under subsection 328-180(1) of the Income Tax Assessment Act 1997 a proportion of the adjustable value of a depreciating asset for an income year in circumstances where paragraph (4)(d) of this section applies to you and the asset;

(b) deducting under subsection 328-180(2) of that Act a proportion of an amount included in the second element of the cost for an asset in circumstances where paragraph (5)(e) of this section applies to you and the amount;

(c) applying subsection 328-180(3) of that Act to you and an asset in circumstances where:

(i) paragraph (5)(e) of this section applies to you and an amount included in the second element of the asset's cost; and

(ii) paragraph (6)(e) of this section applies to you for a deduction for the asset for an income year;

Subdivision 328-D of the Income Tax Assessment Act 1997 applies to you for an income year and the asset as if you were a small business entity for the income year.

(3B) An entity is covered by this subsection for an income year if:

(a) the entity is not a small business entity for the income year; and

(b) the entity would be a small business entity for the income year if:

(i) each reference in Subdivision 328-C of the Income Tax Assessment Act 1997 (about what is a small business entity) to $10 million were instead a reference to $50 million; and

(ii) the reference in paragraph 328-110(5)(b) of that Act to a small business entity were instead a reference to an entity covered by this subsection.

(3) Schedule 1, item 4, page 4 (line 15), omit "$20,000", substitute "$30,000".

(4) Schedule 1, item 5, page 4 (line 24), omit "$20,000", substitute "$30,000".

(5) Schedule 1, item 6, page 5 (line 1), omit "$20,000", substitute "$30,000".

The coalition amendments to this bill give effect to an extension of the instant asset write-off to 26,500 medium businesses and extend the value of assets eligible to $30,000.

This will simplify depreciation for Australia's 3.6 million small to medium businesses, cutting red tape while boosting investment in productive assets to improve their businesses, lower their costs and, in turn, lower prices. This will drive productivity at a time when it has experienced a historic collapse under Labor, which will drive economic growth to fund the essential services Australians deserve.

Following the temporary and targeted extensions during the COVID-19 pandemic, the government has ignored calls from business groups to lower the instant asset write-off threshold to levels not seen since the 2018-2019 financial year. The coalition amendments restore the instant asset write-off to the levels introduced in the 2019-2020 budget. This aligns the eligibility with that of the 25 per cent small-business company tax threshold and Labor's small-business energy incentive measure.

The coalition understands that, when business owners can keep more of their own money, they're able to invest back into the business, boost productivity, grow the economy and create new and, most importantly, local jobs. The coalition amendments mean: firstly, that 26,500 businesses with aggregate turnover of up to $50 million will be eligible to use the instant asset write-off; secondly, that the asset threshold will increase from $20,000 to $30,000, allowing businesses to claim accelerated depreciation on a wider range of assets; and, thirdly, that businesses can invest in productive assets without putting pressure on inflation. I commend the amendments to the House.

Stephen Jones (Whitlam, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

The government won't be supporting the amendments that have just been moved by the member for Barker. I was waiting in anticipation for the member for Barker to produce the documents that they have prepared themselves for the costings in relation to this measure or to refer to the costings that they have produced in relation to this measure. In both cases, there was deafening silence. This is relevant because, in about an hour's time, I am anticipating that the member for Hume will be puffing himself up in this place and talking about how the government is spending too much. At the same time, he's moving bills into this House which would require us to spend even more. We won't be doing that. We have carefully calibrated these measures.

I will say, in relation to the measures that have previously been considered and moved by the member for Warringah, we thank the member for Warringah for the engagement that we've had in relation to these bills. We've had good-faith engagement with her and other members of the crossbench in relation to those measures. But we think, in combination, the two measures, the small-business energy incentive and the incident tax write-off measures, make up a $600 million package of relief and, together with the other measures that have been put in place by the government, they provide a good package of relief with the right incentives for small businesses.

I will say, however, that the points made by the member for Warringah in relation to the amendments she moved make a powerful case for the swift consideration and movement of these bills through both the House of Representatives and the other place. I commend all members of this place and the other place to do exactly that.

Adam Bandt (Melbourne, Australian Greens) Share this | Link to this | Hansard source

For the Consideration in Detail stage, I just want to make a short contribution about schedules 1 and 2 of the bill and also to speak to the amendments moved by the opposition. In particular, schedule 2 implements the small-business energy incentive that was announced in the budget. This is one component of the $1.7 billion in electrification and energy efficiency that the Greens secured through negotiations with the government. On budget night, it was slated as a $314 million package, but the way that the legislation has been designed does raise real concerns for us about whether the full amount of money will be spent.

Firstly, it only runs until the end of this financial year, which we're already deeply in, with only seven months remaining.

That makes it impossible for any thought-through and methodical energy-saving investments to occur for many businesses. Some may have seen that this was coming and may have prepared for it, but many won't have, and many small-business owners are just too busy to manage a project in these short time frames.

Secondly, unfortunately, despite the announcement made in the budget, we're yet to see anything from the Treasury or the department to promote awareness of this scheme amongst small and medium-sized business owners. Thirdly, installing solar panels is specifically excluded for no readily apparent reason.

Lastly, the equipment has to be installed ready for use by 30 June 2024, and questions were raised in the Senate committee hearings about whether that was going to be feasible and whether it was appropriate to be doing such significant work—involving electricity, obviously—in such a period of time. The last thing that we need at the moment is the forcing of important schemes into a tight deadline, so the schedule needs changing and the scheme needs to be extended.

There is a final important area where the bill needs to be improved. This will put beyond doubt that the cost involved in disconnecting a business premises from the gas network is a capital expense and is therefore eligible to receive government support under schedules 1 and 2. If you're applying a High Court pronouncement, there may be some uncertainty over whether disconnecting from gas is an operating expense or a capital expense. If it is, these one-off network costs could take advantage of the energy incentive and the instant asset write-off.

That brings us to schedule 1. Because of the way in which the energy incentive scheme works, is it a 20 per cent bonus on top of any existing asset deduction scheme, such as the instant asset write-off in schedule 1? Again, rather than just legislating this for the next seven months until we have to legislate it again, it also needs to be extended. The opposition is moving an amendment to lift the value of assets that can be instantly written off from $20,000 to $30,000. Given that this will support the value of the small business energy incentive, we see no reason to object to this proposal, so the Greens will support this current amendment in the House, but we reserve our position on the bill as a whole and any amendments until the Senate debate commences.

Milton Dick (Speaker) Share this | Link to this | Hansard source

The question before the House is that the amendments moved by the member for Barker in the name of the member for Hume be agreed to.