The government has recently announced a new action in the federal budget, giving small businesses with a yearly turnover of less than $2 million a 100 percent tax deduction, and to spend up to $20,000 per item on purchases for your company. The instant asset write-off increasing from $1,000 to $20,000 will help businesses with their cash flow, increase the amount of jobs they are able to provide, and most importantly boost overall productivity.
Is it for my company?
If your company generates less than $2 million in yearly sales, and is a registered business with ABN you are a possible candidate to receive the government’s new 100 percent tax deduction. This budget implemented by the Treasurer is designed to empower small businesses to invest, grow, and create many more jobs. It is attempting to revive investment and create economic growth throughout the country. As long as each item is valued at less than $20,000, you may buy any piece of equipment related to your business, and that includes office furniture. Being able to claim immediate tax deductions on numerous items is a great benefit for small businesses, rather than claiming all purchases as deductions over a several year period. You can now claim your income in entirety to reduce your tax bill. The main tax you will pay is income tax. When completing your tax return, you can claim deductions for some expenses that are directly correlated to earning your income and they are subtracted as ‘allowable deductions’ from your total income-reducing your taxable income. In the past, any good costing above $1,000 that pertained to your company had to be recorded in your books as an asset, depreciated over 5 plus years. With the government releasing their new initiative you can now claim the full amount as an expense (up to $20,000). In addition to that, there is no limit on the number of items a business can claim. You incur an expense in an income year when you receive an invoice for an expense you must pay, even if it isn’t paid until the end of the fiscal year, or when you don’t receive an invoice and are charged for the expense.
What else can I claim as an Expense?
Cars, vans, fridges, ovens, kitchens, chairs, desks, computers, printers etc. are all examples of items that can be written off by the company-any item used to run the business. Some deductions that are not work related may also be claimed, such as interest/dividends on investments, gifts/donations, and a deduction for the cost of managing your taxes.
Great! What is the time frame I need to buy these items?
You have 2 full years to take up on the tax deduction. The new initiative started on May 12th
, 2015, and will end on June 30th
, 2017. You should take advantage of this great opportunity for yourself, your company, but more importantly for the entire country as it will create jobs and provide some much needed stimulus. *NB. This above should not be taken as tax advice, it is only our opinion relating to the facts. All circumstances are different and you should seek tax related advice for your business from an accredited professional.