Software tax breaks in $1.2b digital strategy
“We need to stick with this plan. We cannot put it at risk, or go with those who would take us in a different direction,” he will tell the Australia-Israel Chamber of Commerce in Melbourne.
Among the measures is a $170 million change to the tax treatment of intangible assets to bring it in line with tangible assets.
Currently, assets such as in-house software and intellectual property are considered intangible and their depreciation life is prescribed by law.
Under the changes, the taxpayer will have the option of being able to self-assess the effective life of the asset, giving the intangible asset the same status as a tangible asset.
This change will begin on July 1, 2022, on the expiration of the temporary $26 billion investment allowance announced in the October budget which allowed firms with turnovers of up to $5 billion to deduct the full cost of eligible capital assets.
Pressure has been building on the government to enable a more rapid depreciation of intangible assets, as well as broaden the definition of what is an asset to include cloud computing for example, to enable business to move faster into the digital economy.
Every business in Australia is now a digital business.
— Scott Morrison
In the December quarter, capital investment in software rose for the third successive quarter to $4.6 billion. Mr Morrison’s policy does not expand the list of intangible assets to items such as cloud computing.
Other key measures include a 30 per cent refundable tax offset in a bid to grab a bigger slice of the $250-billion-a-year global gaming industry. In 2018-19, the Australian games sector earned just a $144 million slice and the industry has argued that with the right policy settings, that could grow to $1 billion within a decade.
The package will also contain $124.1 million in initiatives to develop the nation’s capability in artificial intelligence, which includes the establishment of a National Artificial Intelligence Centre led by the CSIRO.
The MyGov website will be given a $200 million makeover to streamline and enhance federal government service delivery and another $302 million will be used to bolster the My Health Record service.
Another $100 million will be devoted to the development of digital skills in the workforce, including the creation of cadetships; $113 million will be used to expand the rollout of the consumer data right; $50 million will be devoted to enhancing cyber security; and another $276 million will be devoted to increase the uptake and enhance the value of electronic invoicing by small and medium businesses.
Mr Morrison will argue the digital strategy package is needed to build on the rapid transformation that occurred domestically and globally over the past year as business and consumers adapted to the coronavirus pandemic.
“We must keep our foot on the digital accelerator to secure our economic recovery from COVID-19,” he will say.
“Every business in Australia is now a digital business.
“The tradesman or woman who seeks work through AirTasker. The landscaper who finds most of their new business through search engine placement and social media. The farmer who keeps track of their herd with electronic tags or drones.
“The local Thai restaurant that sells through UberEats, MenuLog, Deliveroo, or any one of half a dozen different food apps. The gym where members book their classes through an app.”
At the same time Mr Morrison speaks, Labor leader Anthony Albanese will use a pre-budget speech in Sydney to assure voters Labor has no plans for a cash splash should it win power, saying his humble upbringing had taught him the value of money.
He will also flag a comprehensive policy to try and deal with the scourge of dementia when he responds to the budget on Thursday next week.
“Without comprehensive reform of the way we manage dementia we face a massive and continuing impact on the productivity of women, who are primarily the carers of ageing relatives,” he will say.
“Next week’s budget should ensure that dementia management is core business for aged care.”