$20,000 asset write-off for Small Business Tax Incentive
On budget night the government announced the jewel in its crown of tax incentives, the accelerated depreciation of assets under $20,000.
We're getting a lot of questions in regards to what can be purchased, who’s entitled to the incentive & when it applies.
It applies to you if have a registered business, i.e. you have an ABN, and your business turnover is under $2 million then you're eligible.
When it applies from:
The tax write-off started instantly at 7.30pm (AEST) 12 May 2015 and will end on 30 June 2017.
Most small capital purchases will be eligible for the new threshold, as long as:
- It is under $20,000 (GST exclusive)
- It is used in the normal course of running your business
Some examples include work vehicles, office equipment, tools, plant & equipment, computers and other electronic items.
Also if the balance of the general small business pool is less then $20,000 it can be immediately deducted up until the 30 June 2017.
What you can't claim, you can't use the write-off to:
- buy stock for your business
- claim for assets that have specific depreciation rules, including in-house software and horticultural plants.
- Assets above the $20,000
This is a great incentive for small business but keep in mind these few small facts:
- Bear in mind you don’t get $20,000 back, you get about $6,000 back. Basically what you get to do is accelerate depreciation 100% in the first year, keeping in mind however, that these assets were already depreciable anyway just over a longer period of time.
- Businesses shouldn't buy things for the sake of buying things, make sure the asset is going to make money and a difference to your business.
- The ATO has already warned it will be targeting small businesses to see if they're making appropriate claims, keep all documentation relating to the purchase.