Instant tax deduction ($20,000) for small business
Recently many small business owners from our local suburbs, including Lilydale and Chirnside Park, have called in or dropped by to our new Office in Chirnside Park office to enquire about the newly announced tax measure of $20,000 tax deduction for small business. The new tax measure temporarily increases the instant asset write-off threshold from $1,000 to $20,000 for small business owners. This huge increase applies from 7.30pm (AEST) 12 May 2015 to 30 June 2017 and will be funded by $1.75 billion from the Federal Government.
This new tax measure announced by the government offers an excellent opportunity for the small business owners to expand the business or update their equipment by buying something new. It will benefit many small business owners from different industries by making asset/expense purchase under $20,000 and getting it all written off in the same financial year. Some practical examples are listed as below:
- If you running a restaurant or a café, the new increase threshold may push you to replace some kitchen appliance or dinning suite.
- If you are a tradie such as plumber, electrician or builder, now can be the best time to get some new tools or equipment.
- If you are providing some professional services including mortgage broking, financial planning, legal services etc., you can also get benefit from the new tax measure by purchasing some computer or software for your office needs.
- If you are running a Family Day Care business, it may help you make final decision to buy some new toys or home office furniture.
In order to utilise the benefit from the new tax measure properly, still some things need to be pay attention to:
- As a small business entity, the business’s turnover needs to be less than $2 million.
- The immediate deduction will apply for each depreciating asset that was purchased for less than $20,000
- The deduction can be claimed in the year when the asset is first used or ready for use.
- The deduction can be applied for both new or second hand assets
- For businesses registered for GST, the purchase cost will be the GST exclusive amount while for business not registered for GST, the purchase cost will be the GST inclusive amount.
All above is just some brief about the new instant tax deduction. If you are interest in knowing more details about how to take advantage of the new tax measure for your bookkeeping and tax return or what is the latest update for tax (e.g. Income Tax, GST, FBT) and Federal Budget 2015-2016, feel free to contact us and set an appointment with our professional accountant for further discussion.
Disclaimer:
The information provided in the above article is just general information related to tax changes update, which cannot be solely relied on for making any tax or business decision. The information discussed in this article does not consider anyone’s specific personal or business circumstance, and may not be suitable for all types of individual or business.
