In a move that will help boost cash flow for small business owners, the Senate recently passed legislation to extend the $20,000 instant asset write-off to June 2019.
Initially introduced in May 2015, the Australian government originally allowed small businesses with an aggregate turnover less than $2 million to claim a $20,000 instant asset write-off.
In March 2017, as part of Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016, the definition of a small business was extended and the $20,000 instant asset write-off was extended to include those enterprises with an aggregated turnover of less than $10 million.
During the 9th of May 2017 federal budget, the instant asset write-off was extended until the 30th of June 2018. In 2018, the federal budget proposed to extend the legislation once more and after a long delay between May and September, the extension of the legislation to June 2019 was passed by the Senate on the 12th of September 2018.
If you’re planning on using this tax break before the next financial year, it’s important you know exactly how it works. Why not put more money back in your pocket? this is a great time to help upgrade your small business for the long term.
Let’s take a look at an example scenario of how one investor can take advantage of the instant asset write-off:
Alice is a Chef with a small cafe she runs with her sister Sophie. Their rapidly expanding business is doing extremely well, and they’ve been thinking about purchasing new plant and equipment assets to help their business continue to grow and expand.
Alice and Sophie would like to update the old espresso machine, replace their commercial fridge and look at installing a new security system.
- Alice and Sophie can buy a new espresso machine and take advantage of the $20,000 instant write-off as the new machine will cost them only $5,137
- They can also purchase a larger cool room for $7,249, replacing their existing commercial fridge. This will cost less than $20,000 and will also be a valid purchase they can deduct immediately
- They can also choose to buy a higher end security system for the café and claim an immediate write-off for this item because the purchase price is just $2,229.
Learn more: Order a commercial tax depreciation schedule
Small business owners can use this instant asset write-off for any depreciable plant and equipment asset or fit-out installed in their business. Other examples of deductible items can range from office furniture, blinds, workstations and light fittings to more specific industry assets such as hospitality, medical or manufacturing equipment.
It is more important than ever to work with a specialist Quantity Surveyor to ensure that all asset deductions are identified and claimed correctly under this new ruling.
BMT Tax Depreciation can show you how to claim more deductions, pay less tax and see a greater return on your business.