Following the May, 2018 federal budget, the $20,000 instant asset write-off scheme has been extended for another year, which is great news for small businesses! The policy was due to finish on 30 June 2018, but the recent announcement by the Treasurer, Scott Morrison, has announced that the popular scheme will now run until until 1 July 2019.
So, if you have anticipated upcoming expenses for your small business, you can claim the deduction in the current and next financial year. With the end of the financial year only a few weeks away, the Federal Government's $20,000 Instant Tax Asset Write-off Scheme for small business is due to finish on 30 June 2018. Here is a quick summary of the Scheme and how to take advantage of it:
The Scheme was introduce in 2015 and so far has assisted over 300,000 small business annually to improve their cash flow.
To be eligible
- you must have a turnover less than $10 million (this has increased from $2 million in 2016), and
- the asset was first used or installed ready for use in the relevant financial year ie: before June 30, 2018 or in the 2018/19 financial year.
What can you claim?
Small businesses can purchase any physical asset for business use, if each item is valued at less than $20,000. You can then claim the full amount from your income to reduce your tax bill. There is no limit on the number of items a business can claim.
So this could include items like: cars, motorbikes, fridges, coffee machines, tables and chairs, carpets, printers, photocopiers, tools, generators, pumps, solar panels, heating, hot water units, water tanks, air-conditioning units, sound and security systems, computers. Any item used for running the business will be 100 per cent tax deductible!
In March 2018, Nick bought a second hand ride-on mower for $18,000, which is used for his landscaping business. As the depreciating asset cost less than $20,000, Nick will be able to claim an immediate deduction for this asset for the full amount.
In February 2018, Daryl bought a new car for $19,999 that he uses 80% of the time for business purposes for onsite jobs in his electrical trades business and 20% of the time for personal use.
Daryl can calculate an instant asset write-off as 80% (the business use proportion) of $19,999, so he claims $15,992.
Three cars under 20K
- 2017 Mazda 2 Neo - $16,990
- 2017 Kia Picanto - $15,690
- 2018 Suzuki Baleno Hatchback - $16,990
For further information about the $20,000 Instant Asset Write-off Scheme and financing options for a quick purchase before 30 June, contact Express Fund.