Small Business $20,000 Asset Write-off


cashSmall businesses had a win on budget night with the proposed immediate write-off of business assets up
to $20,000 from 12th May.

What does it mean for me in business?

If you purchase a new asset up to $20,000 you will be able to claim the full amount as a deduction off your business income.

Existing Assets?
If assets were previously held in a ‘general pool’, under the simplified depreciation rules and the pool balance is under $20,000 you are able to write-off these assets immediately in the 2015 tax return.

What if my asset is more than $20,000?
Equipment purchased of $28,000.  You will not be able to write-off $20,000 immediately but the asset may be pooled at 15% for the first year then 30% on the balance in the second.
If the equipment is leased please contact us for further information on its treatment.

When does this measure end?
June 30th 2017.

Is the measure law yet?
The proposed change has not yet been enacted but will be backed from budget night (12th May 2015).

Tax savings?
The tax saving of a sole trader who purchased a vehicle (new or second hand) of $18,000 would reduce his business expenses by this amount and in turn reduce the taxable income by $18,000.
For example if taxable income before business asset purchase was $55,000 (marginal tax rate of 19%), after the deduction for business he would save approx. $6,480 off the estimated tax bill.



Should I go out shopping now?
This incentive will be around until June 2017 so there no real urgency to purchase now if you can hold off unless you are estimating a rather large tax bill on its way!
Bear in mind that just because an incentive is available does not mean you go out and buy an asset if not affordable in your circumstances.
You will need to look at your cash flow situation and whether the existing asset actually needs replacement.
The benefit should also out way the cost!


hyperlink  Further information

ato  Accelerated Depreciation


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