Australian Investment Guarantee

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A Shorten Labor Government will boost investment and create new jobs with the Australian Investment Guarantee – targeted tax relief for businesses that invest in Australia and Australians.

Annual business investment in Australia as a proportion of the economy is at a quarter century low. When firms aren’t investing, they’re not expanding and they’re not diffusing cutting edge technologies that make them produce more with less.

This is why Labor will invest in a new Australian Investment Guarantee. Under Labor’s Australian Investment Guarantee, all businesses in Australia will be able to immediately deduct 20 per cent of any new eligible asset worth more than $20,000, with the balance depreciated in line with normal depreciation schedules from the first year.

Labor’s Australian Investment Guarantee is permanent – that means businesses can continue to take advantage of the immediate tax deductibility whenever they make a new investment in an eligible asset.

Labor supports the reduction in the company tax rate to 25 per cent for businesses with turnover of less than $50 million and extending the instant asset write off for small and medium businesses making investments less than $30,000. In addition, Labor’s Australian Investment Guarantee will allow all companies to accelerate their depreciation expenses on all new investments.

The new Australian Investment Guarantee features the following scope and key design elements:

  • Eligible assets will include tangible machinery, plant and equipment for both upgrades and new purchases (for example, farm tractors and food processing machinery).
  • Depreciable intangible assets (often referred to as “knowledge assets”) which make up an increasingly larger component of non-mining investment will also be eligible (for example, patents and copyrights).
  • Investments in structures and buildings are excluded, consistent with previous accelerated depreciation policies used in Australia.
  • It will not apply to otherwise eligible expenditure currently claimed under the existing research and development tax concession.
  • It will not apply to passenger motor vehicles, but it will apply to non-passenger motor vehicles such as lorries, vans, utes and trucks that are used to support trade businesses. It would also apply to battery-powered electric vehicles.
  • It will only apply to eligible investments valued at over $20,000 (with no pooling of assets allowed) to ensure it is well-targeted at productivity-enhancing investments.

The Australian Investment Guarantee is a pro-growth, pro-jobs reform that rewards businesses making new investments in Australia. It will be a permanent feature of the tax system, so all companies have the confidence to invest for the long term.

The Australian Investment Guarantee will cost around $3.9 billion over the forward estimates.

We will pay for this commitment by making multinationals pay their fair share and closing tax loopholes used by the top end of town.