Treasurer Jim Chalmers will make the $20,000 instant tax write-off scheme permanent for small businesses and self-employed tradespeople.
The program was set to end on June 30, but Dr Chalmers is expected to renew it and make it permanent in the Federal Budget on Tuesday.
Labor increased the instant write-off threshold from $1,000 back in 2023, though it was on a temporary basis.
The rule allows eligible businesses to immediately deduct the full purchase cost of an eligible asset in the same financial year from that years' taxable income. The asset can be worth up to $20,000, providing a significant cash boost.
Before the scheme was introduced, businesses were required to claim the cost across multiple financial years as depreciation.
The $20,000 threshold is per-asset, meaning businesses can claim multiple expenses in the same year.
The move is part of Labor's broader push to boost productivity through the budget.
'A big productivity push is one of the most important parts of Tuesday's budget to grow our economy and lift living standards,' Chalmers said.
Treasurer Jim Chalmers (above) will make the $20,000 threshold for instant tax write-offs permanent on Tuesday
The scheme allows small businesses to claim expenses for assets, up to $20,000, bought in the same financial year
'We are acting on a broader range of fronts to make our economy more productive and dynamic.
'A lot of work, a lot of consultation has gone into this very substantial productivity package. It's all about getting costs down, cutting red tape, making it easier and faster to build, and making Australia a more attractive place to invest.'
The budget will reform eight areas to improve productivity, mainly focusing on reducing red tape and streamlining national systems, the Herald Sun reported.
Red tape deduction includes a $780million-a-year reduction in regulatory costs for the financial sector through 14 law changes.
The federal government will also work to change state-run systems for payroll tax administration and retail tenancy frameworks so national businesses aren't forced to comply with differing rules by jurisdiction.
Another $650.5million has been dedicated to creating a 'tell us once' national digital ID system, so Australians don't need to submit multiple IDs to different government agencies.
Exporters and importers are also set to receive a $5.7million investment to help speed up market access by cutting administrative costs.
The government will wave the cost of accessing Mandatory Australian Standards for construction, occupational health and safety, and product safety.
Hospitality, retail and trades are the big winner from the tax break
The items need to be purchased for work for example tools, computers or payment systems
The cost is currently put on tradies and costs small businesses up to $1,600 a year.
Migrant skilled workers will also have an easier time getting Australian qualifications with a reform set to cut the time it takes them to enter the workforce by up to six months.
Australian university students with relevant TAFE qualifications have been promised a National Credit Recognition Framework to limit duplication between their qualification and degree.
The move would help Aussies with a TAFE qualification complete their degrees faster.