9th May, 2018
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.