As widely known, the Government elected to keep the $20,000 instant tax deduction in place for one more year, and with the end of financial year approaching many businesses may take advantage of the policy.
Instead of having the asset depreciate over a number of years, small businesses are now able to write off the depreciation immediately. It means that small business are more likely to buy new equipment or technology, which can make them more efficient and help them grow.
Under the rules, the definition of a small business is one with a turnover of up to $10 million.
This means a whole new raft of businesses could take advantage of the policy — but there still are a couple of caveats you should be aware of.
The type of asset you can buy needs to be a depreciating asset and it needs to be worth less than $20,000.
A depreciating asset is one used in the course of business which has a limited shelf-life and is expected to decline in value.
For example, you may buy a shiny new laptop computer for your business, but in a couple of years that laptop isn’t going to be so shiny.
Previously the depreciation of the asset played out over several years – so you got a bit of a deduction one year and another one the next year and so on.
Under the government’s scheme, you get the entire thing in one hit – which makes it much simpler.
Things that qualify include:
Things that don’t qualify include:
Knowing what qualifies and what doesn’t is one thing.
But what if you don’t have the cash to make the purchase?
Finding cash for new equipment can be really tough, but luckily there are fast turnaround options for Australian SME’s.
We found that of the loans being issued by OnDeck, 15 percent were using the service to purchase new equipment.
MYOB Loans powered by Ondeck* offers small businesses a finance option which better suits their needs, as many business owners find traditional capital harder and harder to access.
Where a traditional loan is a manual process that can take weeks or months, an OnDeck loan can be approved as fast as 24 hours.
MYOB customers can apply for a loan between $10,000 and $250,000 with payment terms ranging from six to 24 months.
If you’re a business owner with solid cash flow (but without $20,000 sitting around to purchase new equipment), it might be worth your while to find out more.
* Disclosure: Loans are issued by OnDeck Capital Australia Pty Ltd ABN 28 603 753 215. MYOB holds a 30 percent stake in OnDeck and has a referral agreement under which it earns a commission on loans referred to OnDeck. “OnDeck” refers to On Deck Capital Australia Pty Limited ABN 28 603 753 215. OnDeck® is a Registered Trademark. All Rights reserved. Loans subject to lender approval.
The information provided is general in nature and should not be taken as tax advice. For specific advice relating to your particular circumstances please contact the ATO or your tax advisor.