Australian small businesses and sole traders are rejoicing after the Senate approved the government’s $20,000 tax write-off.

Businesses and sole traders with an annual turnover of less than $2 million are now able write off the tax on physical items relating to their businesses up to a threshold of $20,000.

Those doing so will need to have a registered ABN. The write-off does not cover marketing expenses.

At 11am on Friday the senate passed the new law with no amendments, with only a short debate.

At the same time the senate also rubber stamped a 1.5 per cent tax cut.

Treasurer Hockey had announced the measures in the May budget as crucial to reviving the Australian small business sector.

The previous write-off threshold was only $1000. Business groups are applauding the new limit believing they will substantially lower the barrier to entry for new businesses and thereby enhance competition and stimulate the economy.

The tax cut was retroactively applied to have begun on Budget night. It will remain in force in its current state until June 30, 2017. At which time Prime Minister Tony Abbott, has signaled a review –and possible increase – of the threshold limit.

Reserve Bank Governor Glen Sevens has dropped interest rates about as far as he dare in an attempt to stimulate the struggling small business sector. Perhaps the raised tax write-off will entice entrepreneurs to make an investment and take their chances?

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