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In its submission to the Treasury Laws Amendment (Tax Reform No. 2) Bill 2026, the association welcomed the government’s plan to make the instant asset write-off (IAWO) permanent and supported the introduction of a permanent loss carry-back tax offset.
However, it said the legislation should be strengthened by lifting the instant asset write-off threshold to $150,000 and extending eligibility to businesses with annual turnover of up to $50 million.
The Commercial & Asset Finance Brokers Association (CAFBA) said its proposals were “responsible and feasible” and would “align with the Treasury’s goals of empowering small and medium-sized businesses to invest, grow, create employment, and ultimately thrive”.
Why CAFBA wants a higher threshold
CAFBA argued that the proposed $20,000 cap no longer reflects the financial realities facing many businesses and would continue to discourage investment in higher-value assets.
The association said many businesses delay or avoid purchasing equipment because assets above the threshold must be depreciated over several years, creating additional complexity and reducing the incentive to invest.
It pointed to purchases such as commercial vehicles, machinery and advanced IT infrastructure, arguing a $150,000 threshold would better reflect the investments businesses need to improve productivity and support long-term growth.
David Gandolfo, CAFBA’s chair of advocacy, told Broker Daily that the $20,000 cap was inadequate for the majority of transactions asset finance brokers were facilitating.
“To have a $20,000 asset write-off is OK for the sorts of business equipment we would regard as tools,” he said.
“I am the chair of advocacy but I’m also a customer-facing broker. In my business, the number of transactions that we do in the $100,000–$150,000 space is 10 times the number of transactions we do in the sub $20,000 space.”
Gandolfo said that tax incentives such as IAWO had an “almost immediate impact” on boosting business investment.
“What we know historically is that tax incentives like the instant asset write-off have prompted people to update and renew assets,” he said.
“We can demonstrate that there are peaks and troughs in investment in equipment and those peaks and troughs have largely followed the tax incentives that have accompanied them.
“They’re a far greater incentive than lower interest rates or lower tax rates. The benefit is identifiable, it’s quite easily quantifiable and it’s immediate.”
Adding certainty to an uncertain market
Gandolfo added that given the challenging business environment, the increasing of the caps could help to give businesses confidence to invest and grow.
“Temporary full expensing during COVID was the lever that Treasury pulled to prompt people to invest in their business,” he said.
“Business activity and investment at the moment is subdued and that’s a reflection of higher interest rates and some uncertainty. If you want to overcome that, you’ve got to incentivise people to invest and to increase their own ability to grow their business.
“This is one of the things that’s holding people back at the moment.”
CAFBA also said making the measure permanent would provide businesses with greater certainty when planning investments, avoiding situations where equipment is ordered under a one tax regime but delivered under another, as occurred during the end of COVID-19 era support measures.
Proposal is ‘budget neutral’
CAFBA argued that increasing the instant asset write-off threshold would be “fundamentally budget neutral over time” because businesses would not receive additional tax deductions, only access them sooner.
The submission said the proposal simply changes the timing of deductions rather than their overall value, while stronger business investment could ultimately support higher tax receipts by boosting business growth and profitability.
“We keep on being told by the Treasurer that we can’t increase past $20,000 because it costs too much,” Gandolfo said.
“If you’re going to do proper forward estimates, you’ve got to take into account years two, three, four and five, not just year one.
“If you’re going to make a proper financial assessment of what the impact is, there’s an immediate cost to the budget, which is recouped in the subsequent three to five years.
“But also, there’s an immediate increase in throughput capacity in business and business investment, and investment, particularly in small business, is what actually grows the economy.”
Loss carry-back reforms
CAFBA also backed the bill’s proposal to introduce a permanent loss carry-back tax offset, describing it as an important measure to support business cash flow during periods of economic pressure.
The association said the measure would allow eligible companies to offset current-year losses against tax paid in previous years, generating refundable tax offsets at a time when many businesses are dealing with higher operating costs and tighter margins.
It noted the government expects the measure to benefit around 85,000 companies each year, predominantly small businesses across sectors, including construction, manufacturing and professional services.
However, it called for the rules to be simplified for businesses with annual turnover below $10 million, suggesting a safe harbour approach that would reduce compliance costs and enable smaller businesses to access the cash flow support more quickly.
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