Council of Small Business Organisations Australia chief executive Peter Strong said the timing would not be an issue and small businesses would spend thoughtfully and quickly.
“It’s quite an extraordinary increase, completely unexpected,” Mr Strong said.
The rules allow businesses to immediately write off the cost of assets under the threshold and claim a tax deduction for the business portion of the expense in the first year the asset is used or installed.
Mr Strong said it was a “clever” policy that would encourage many businesses to bring forward planned spending or act on purchases they had been considering or putting off.
“Those who might have bought secondhand are more likely to buy new [higher-priced items],” he said, listing office fit-outs, IT equipment and heavy machinery as among the categories likely to benefit.
Depreciation deductions will also be accelerated under the stimulus package for businesses with turnover below $500 million until June 30, 2021. About 3.5 million businesses will be able to access benefits from across the instant write-off and deduction measures.
Business Council chief executive Jennifer Westacott said businesses needed to bring forward their investments to generate activity and jobs.
“We have called for a focus on investment for some time and we welcome the government’s response to that,” she said. “We particularly commend the instant asset write-off and accelerated depreciation initiatives, which will encourage investment and allow small and medium-sized businesses to grow.”
A spokeswoman for the Housing Industry Association said construction businesses would benefit, with home-building companies most likely to spend on machinery, computer-design equipment and materials.
The instant asset write-off was first introduced in 2015 and has been extended every year. In 2017-18, more than 360,000 businesses claimed deductions worth over $4 billion under the scheme.
CreditorWatch chief executive Patrick Coghlan said in a statement the “much-needed” cash injection would help keep business owners afloat.
“Without this help, we’d be likely to see a serious increase in company failures,” Mr Coghlan said.
Shadow treasurer Jim Chalmers told Sky News some aspects of the stimulus package were “similar” to what Labor had wanted, including support for employers of apprentices.
“Clearly we support apprentices and [the] instant asset write-off,” he said.
Jennifer Duke is an economics correspondent for The Sydney Morning Herald and The Age, based at Parliament House in Canberra.