Small Business

$20k Small Business Immediate Tax Deduction

The immediate write-off on depreciable items for businesses has been extended to 30 June, 2018. In addition, the threshold for qualifying businesses has been lifted from an aggregated annual turnover of $2m to $10m which will give up to 90,000 extra businesses access this tax break.

The $20,000 cap is exclusive of GST for businesses who are registered for GST while the $20,000 is inclusive of GST if you aren’t registered for GST. Some key points regarding the concession include:

  • The asset can be new or second-hand
  • The asset must be first used or installed ready for use by June 30, 2018
  • After June 30, 2018, the write off threshold will revert back to $1,000
  • The write-off of the asset is for the ‘taxable purpose proportion’ which is the proportion of the asset's use in a financial year for producing assessable income (business purposes)
  • The instant asset write-off only applies to certain depreciable assets.  There are some assets, like horticultural plants, capital works assets (like building construction costs) and assets leased to another party on a depreciating asset lease that don’t qualify - If you are uncertain, we urge you to consult with us before you purchase the asset
  • Assets costing $20,000 or more can be allocated to a pool and depreciated at a rate of 15% in the first year and 30% for each year thereafter.

While the $20,000 accelerated write-off incentive sounds attractive to small business owners, spending up to $20,000 on an asset to simply get a tax deduction may not be prudent. There are specific rules around this tax break so we urge you to seek professional advice before committing to a major asset purchase.

Click HERE to download the full edition of The Business Accelerator Magazine for June 2017

Other Articles in This Edition:

Some of the Biggest Mistakes Small Businesses Make With Their Websites
Federal Budget – Economic Summary
Small Business - Company Tax Rates
Small Business - Extension of Taxable Payments Reporting to Courier and Cleaning Industries
Small Business - Access to CGT Concessions
Small Business - Looking to Employ Foreign Workers?
Individual Tax Rates
Individuals - Changes to the Medicare levy
Restricting Residential Investment Property Deductions
Individuals - Higher Education Reform  
Superannuation - Contributing Proceeds from Downsizing to Superannuation
Superannuation - First Home Super Saver Scheme
GST Changes - Purchasers to Pay GST on New Residential Premises
GST Changes - Digital Currency & Low-Value Imports
Tax Integrity Measures

DISCLAIMER: This document contains general advice only and is prepared without taking into account your particular objectives, financial circumstances and needs.  The information provided is not a substitute for legal, tax and financial product advice.  Before making any decision based on this information, you should speak to a licensed financial advisor who should assess its relevance to your individual circumstances.  While the firm believes the information is accurate, no warranty is given as to its accuracy and persons who rely on this information do so at their own risk.  The information provided in this bulletin is not considered financial product advice for the purposes of the Corporations Act 2001.