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In a joint media release No 2011/045, issued 8 May 2011, the Treasurer, Wayne Swan, the Assistant Treasurer and Minister for Financial Services and Superannuation, Bill Shorten, and the Minister for Small Business, Senator Nick Sherry announced that the Government will provide Australian small businesses with an instant tax write-off of the first $5,000 of any motor vehicle purchased from 2012-13.

This measure is estimated to cost $350 million over the forward estimates and builds on the Government's existing tax reforms for small businesses to be introduced in 2012-13 that allow:

  • an immediate write-off of all assets valued at under $5,000 (up from $1,000 presently) estimated to cost $1.7 billion over the forward estimates;
  • a write-off of all other assets (except buildings) in a single depreciation pool at a rate of 30%. Currently, small businesses allocate assets to two different depreciation pools, with two different depreciation rates (30% and 5%); and
  • a reduction in company tax rate to 29% for incorporated small businesses.

These tax reforms will be available to all small businesses, including sole traders and businesses operating through trusts, partnerships and companies.

The new small business instant write-off for the first $5,000 of any motor vehicle will replace the Entrepreneurs Tax Offset, which the Australia's Future Tax System Review recommended be abolished because of its poor targeting and high compliance costs.


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