20 Asset write off$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.

If you would like to talk to one of our tax professionals more about how this may apply to your business or any other question in relation to the 2015/16 Budget get in contact with us today!

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