If you own or work in a business, then we have good news: The government has extended the $20,000 instant tax write-off until the 30th June 2019.
How does the initiative work?
The government established a $20,000 one-off tax write-off in 2015 to help small businesses. If you haven’t heard of the government’s one-off tax write-off, you’re not alone. In 2016-2017, data shows that out of approximately 2 million businesses eligible for this scheme, only 350,000 availed it.
It’s actually a wasted opportunity, as American Express research says that only 47% of businesses are aware of the tax write-off program while only 52% of respondents accessed the deduction. Still, the Council of Small Businesses of Australia is lobbying to make the write-off permanent.
The scheme is actually straightforward and easy enough to understand. Here’s your chance to learn more about this initiative for the benefit of your business.
Tax Write-off Helps Small Businesses in Australia
The government’s write-off was initially designed to give small businesses—that is, those with yearly turnover not exceeding $10 million—to claim immediate deductions of $20,000 for new or second-hand equipment.
Whats more, with an election coming up, both parties have pledged to make the scheme even more attractive: with the government promising an increase in the limit up to $30,000. The labour party, not to be outdone, the labour party have pledged to make the write-off scheme permanent, rather than going year-by-year.
The tax write-off is further improved as it’s increased from $20,000 to $25,000 with the deadline of the proposal extended to June 30, 2020. Qualified businesses can claim the depreciated value of assets instead of getting the deductions in a number of years.
This is provided that the equipment is used or installed in the income year where the write-off is claimed for. Industry experts say that the tax write-off is helpful because it stimulates investments and helps small businesses grow all the more. And yet the average claim made by a business is below $10,000 each year.
Purchases to Make for Write-off Qualification
Purchase of depreciating assets makes a business eligible for the tax write-off. Examples of qualified assets include computers, furniture, cars, electrical equipment and other purchases made for the business.
Thinking of making a purchase to help in your day-to-day operations or that can expand your business? For instance, your company can buy a vehicle to help with operations requirements. You can also purchase additional equipment for business growth. The $20,000 ceiling amount applies to the total asset cost and not only on the taxable price.
A lot of businesses that don’t understand the write-off and its scope should consult with experts. Talk to accountants or financial experts for a list of assets that can qualify you for the write-off.
Benefit of Claiming the Write-off
The write-off is actually good for business because you can make purchases on machinery, equipment and other assets, thereby stimulating the economy. Tax write-offs are practical and easy to understand.
Getting your tax right is just another part of what can be a complex plan and journey forming retirement planning, wealth creation and even estate planning. Through the Dollars With Sense network we have access to specialists and panel members who can assist you in these areas and more. For more information on the tax write-off and whether your business is qualified for it, request a free consultation with one of our team members below.
Listen to Dollars with Sense’s current episode below with guest Deborah Rognlien from the Intelligent Financial Group (The IF Group). Deborah shares crucial facts about the tax write-off, superannuation, financial planning and reveals how businesses can reap the benefits of the governments tax write-off.