Express Fund Blog

Small business tax benefits

Posted by Jodie Henderson on Sep 14, 2017, 9:26:41 AM

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Did you know that the $20,000 instant asset write-off for small business has been extended by 12 months to 30 June 2018? So, if you buy an asset before 1 July 2018 and it costs less than $20,000, you can immediately deduct the business portion in your 2018 tax return.

To work out if you are eligible as a small business, the following parameters apply:

  • you have a turnover less than $10 million (this has increased from $2 million), and
  • the asset was first used or installed ready for use in the relevant financial year.

You may remember that back in May 2015, the Federal government implement an instant tax right-off scheme for small business that applies for assets purchased until 30 June, 2017?  The scheme allowed small businesses to write off purchases up $20,000 instantly for tax purposes and was due to finish in June, 2017. The good news is that the "limited time" offer has been extended through to 30 June 2018, after the government was able to see significant benefits to small business to extend the scheme.

Rob Emmett, CEO of Express Fund Equipment Finance says that the extension of the scheme is welcomed, especially in the rural farming sector, where the uptake of the rebate has been considerable. Farmers have tapped into the instant rebate for some of their smaller equipment purchases.

In terms of improvements to the Scheme, Rob Emmett thinks the rebate amount of $20,000 should be raised in order to take advantage of larger equipment purchases - after all you can't buy much for under $20,000 now days.

Here is a quick summary of the Scheme and how it works

Any small business with an aggregated turnover less than $10 million, is eligible to claim an immediate deduction for the cost of depreciating assets acquired for less than $20,000, rather than having to write them down over the following years. The scheme was available to businesses turning over up to $2 million annually, however, this threshold has now increased to $10 million in July 2016.

This means that a small business will be able to claim an immediate deduction for the cost of each and every depreciating asset that they purchase for less than $20,000.

For example, 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.

All assets (both new and used) that can be depreciated, are eligible under the scheme.  Some examples include:- 

  • Computers, printers, scanners and photocopiers.
  • Tradesmens tools and farm machinery.
  • Plant and equipment.
  • Kitchen or office equipment, signage and air conditioners.
  • Work vehicles, under $20,000 in value.

Some final things to consider

The rebate scheme is only of value to businesses considering purchasing the equipment anyway or have a genuine business case to update equipment. So don't rush out and buy an asset just to claim the rebate if your business doesn't need the item. And remember, that if you are planning to make a loss for the financial year, then a tax deduction is of no use to you. You can find out more about the instant tax right-off scheme here

If you are interested in purchasing some equipment, you may consider equipment finance. Feel free to contact Express Fund for more information.

Source: ato.gov.au 

Topics: Equipment Finance