From 7:30pm on Tuesday May 12th, small-businesses who have a turnover of less than $2million will be able to claim an immediate tax deduction for any individual assets they buy that cost under $20 000. This is an increase upon the previous threshold which sat at $1000, to be claimed as a tax deduction over 5 years.
The $20 000 limit applies to each individual item. Small businesses can apply this $20 000 rule to as many individual items as they wish. These arrangements start from Budget night and will continue until June 30th, 2017. All items which cost more than $20 000 can be pooled together and depreciated at 15% in the first income year, and 30% per year after that. Once the value of the pool falls below the $20 000 mark, it can all immediately be deducted.
So what items are included you may ask? The answer is anything you use to run your business, such as office furniture, computers, printers, cars, tools, even a new coffee machine for the office. There are some exclusions however – stock for your business, office software, plants, and marketing costs are not able to be claimed.
To view some examples on how this new $20k rule may affect your business, take a look at the ‘Accelerated Depreciation Examples’ by clicking the following link – http://www.budget.gov.au/2015-16/content/highlights/jobsandsmallbusiness.html
If you are unsure of how to take advantage of these tax deductions, and to make sure your business and purchases are eligible for this tax break, please contact our office on (02) 9286 3088.