Why now is the perfect time to upgrade your equipment
The $20,000 tax break for SMEs has been super popular, but it’s not guaranteed to survive the next budget – so best get in now.
Back in 2015 the federal government announced that it would put a $20,000 immediate tax deduction in place for depreciating assets for companies with a turnover up to of $2 million.
It was so popular that the following year the government widened the scope of the scheme to businesses with turnover of less than $10 million.
The scheme was intended to run for a couple of years, and is scheduled to end at the end of the financial year.
The government is expected to make a decision on whether or not to extend the scheme in this year’s federal budget. It would be against the odds if it were to scrap the deduction – but nothing’s certain in this world.
How can you take advantage of this scheme before the 30 June deadline?
What kind of assets can I get?
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:
- Office or shop furniture and fittings
- Display screens, kitchen equipment, signage and air conditioners
- Work vehicles
- IT hardware such as desktop computers, printers, scanners and photocopiers
- Plant and equipment
Things that don’t qualify include:
- Computer software
- Certain intangible assets (goodwill)
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 options for you.
Are you one of the 15 percent?
We found that of the loans being issued by OnDeck, 15 percent were using the service to purchase new equipment.
MYOB has teamed up with OnDeck to offer 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 in as little as one business day.
MYOB customers can apply for a loan between $10,000 and $150,000 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.
* Loans are issued by OnDeck Capital Australia Pty Ltd ABN 28 603 753 215.
MYOB holds a 30 percent stake in OnDeck Australia and has a referral agreement under which it earns a commission on loans referred to OnDeck Australia.
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.