One of the biggest announcements in last night’s budget was the reintroduction of the 100% deduction for equipment purchases by small Businesses. However, this time it’s a more generous limit of $20,000 per item. So what can this mean for your business?
Business with an annual turnover of under $2 million can claim immediate tax deductions for as many sub – $20,000 purchases as they make between 7.30pm on budget night until June 30th 2017.
The $20,000 tax break applies to businesses that can demonstrate ongoing activity via quarterly Business Activity Statements and must be actively trading to be eligible for the tax break.
Assets over $20,000 are not eligible for the instant tax write-off, but can be fully written off over a longer period.
Any assets over $20,000 can be added together and depreciated at the same rate. These assets are depreciated at 15 per cent in the first income year, and 30 per cent per year thereafter.
If the value of the pool is below $20,000 until the end of June 2017 it can be immediately deducted too.
So what can you buy? Anything used for running your business for instance, computers, printers, office furniture, coffee machines, kitchen equipment, cars and tools for example.
There are a few items not deductible, including some horticultural plants, marketing costs, stock for your business and any software developed in-house by a business.
In addition to the instant asset write-off, companies with annual turnover of less than $2 million will have their tax rate lowered, from 30 per cent to 28.5 per cent which is the lowest small business company tax rate in almost 50 years. For unincorporated businesses that is typically your sole traders or partnerships there is a 5% tax discount up to the limited of $1000.00.
Please note that this information provided is of a general nature for Australian business and should not be your only source. Circumstances vary from financial year to year so consult an experienced tax agent.
Check out my website www.bookkeepingfairyperth.com.au or contact Jaleana 0400 102 358
.