Small and Medium Business Tax Planning: Asset Write-Off Increased to $30,000
Before the election was announced, the Parliament approved that business entities with an annual turnover of less than $50m, can now Write-Off assets that cost less than $30,000 in the year that they buy them. The Government decided to extend the small business relief (businesses with less than $10m turnover) to include medium businesses (businesses with less than $50m turnover).
If you want to finance this equipment or a vehicle, it is our view from a tax perspective to finance the equipment or vehicle against that particular asset (rather than from cash reserves from the business, or from a redraw from a directors house). For tax and advice relating to your finance, please let us know, and our Finance Team can assist, in conjunction with our Tax Team to make sure that you get the maximum tax deduction allowable, along with the best finance structure.
This now applies for any asset purchased after 2 April 2019, and before 30 June 2020. Further details for assets purchased from 1 July 2018 to 1 April 2019 are shown in the table below.*
For business owners looking to get tax planning and tax deductions now, before 30 June 2019, it is a good time to consider this and to claim a full tax deduction. The asset must be first used, or installed and ready for use, by 30 June 2019 to claim the deduction in this financial year.
Most clients looking for the best use of this increased Write-Off allowance are looking to buy a vehicle, or a piece of machinery (coffee machines, tools, processing equipment) that are under $30,000 to obtain the full deduction.
*This is a summary of the deductions and the dates for this financial year:
|Key rate: Small business depreciation — instant asset write-off threshold|
|Purchase date or date asset first used (or installed ready for use) for a taxable purpose||Threshold|
|1 July 2011 to 30 June 2012||$1,000|
|1 July 2012 to 31 December 2013||$6,500|
|1 January 2014 to prior to 7.30pm (AEST) 12 May 2015||$1,000|
|7.30pm (AEST) 12 May 2015 to 28 January 2019||$20,000|
|29 January 2019 to before 7.30pm (AEDT) 2 April 2019||$25,000|
|7:30pm (AEDT) 2 April 2019 to 30 June 2020||$30,000|
|From 1 July 2020||$1,000|
Important information and disclaimer
This publication has been prepared by AustAsia Group, including AustAsia Finance Brokers Pty Ltd (Australian Credit Licence No 385068) and AustAsia Accounting Services Pty Ltd (Registered Tax Agent No 7587 3005).
AustAsia Accounting Services Pty Ltd – Liability limited by a scheme approved under Professional Standards Legislation.
Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Accordingly, reliance should not be placed on the information contained in this document as the basis for making any financial investment, insurance or other decision. Please seek personal advice prior to acting on this information.
Information in this publication is accurate as at the date of writing, 3 May 2019. Some of the information may have been provided to us by third parties. Whilst it is believed the information is accurate and reliable, the accuracy of that information is not guaranteed in any way.
Opinions constitute our judgement at the time of issue and are subject to change. Neither the Licensee nor any member of AustAsia Group, nor their employees or directors give any warranty of accuracy, nor accept any responsibility, for any errors or omissions in this document.
Any general tax information provided in this publication is intended as a guide only and is based on our general understanding of taxation laws. It is not intended to be a substitute for specialised taxation advice or an assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent.