All small businesses will get an immediate tax deduction for any individual assets they buy costing less than $20,000. (Currently, the threshold sits at $1,000).
This $20,000 limit applies to each individual item. Small businesses can apply this $20,000 rule to as many individual items as they wish. These arrangements start from Budget night and continue until the end of June 2017.
If you have a registered business, i.e. you have an ABN, and your business turnover is under $2 million.. you’re eligible.
Example of how it works
If each individual piece of equipment costs less than $20,000, the instant write-off would apply to an entire order.
Let’s assume your order is $250,000.
Assuming each piece of equipment is $20,000 or less.
The entire order for $250,000 can be instantly written off.
Assume tax rate at 30%.
A business showing sufficient profit would claim an instant $75,000 tax deduction.
What can be purchased?
Any asset used for business purposes up to the amount of $20,000 and for as many items you want, such as cars, gym equipment, office equipment, trade tools, catering equipment,
machinery and so on. Goods can be new or used.
What can’t be claimed?
You can’t use the write-off to buy stock for your business, or claim for assets that have specific depreciation rules, including in-house software and horticultural plants.
Assets above the $20,000 threshold can be added together in the existing simplified depreciation pool and depreciated at the same rate: 15% in the first income year and 30% thereafter. If the value of the asset “pool” is less than $20,000, it can be immediately deducted until the end of June 2017.
When does the tax break expire?
Effective now until June 2017.
Can the equipment be financed and still receive the tax break?
The type of finance used is crucial in being able to claim the benefit. Discuss your options with a Business Finance Specialist today.