What is the SME instant-asset tax write-off all about?
Last year, the Federal Government passed legislation to extend the instant asset tax write-off for small businesses until June 30, 2019 and increase it to $25,000 per asset during 2019. In the 2019 Budget, the Federal Government announced further plans to increase the instant-asset tax write off for small businesses to $30,000 per asset and extend the plan until June 30, 2020 – if they are re-elected on May 18.
How does it work?
Small businesses can currently purchase an eligible asset up to $25,000 (ex GST) and write it off as a tax deduction in the same financial year of purchase. What’s more, the tax write-off could apply to more than one new asset.
In the past, only assets valued up to $1,000 (ex GST) could be written off in this way. Tax deductions for more expensive business assets are usually based on depreciation. Small business owners claim this expense in their business tax return over time.
To find out more about the different methods of depreciating business assets, or claiming the instant-asset tax write-off, visit the ATO website.
What are the rules?
A small business can currently claim an immediate tax deduction for the business portion of each asset purchased in the 2018/19 financial year provided:
- the asset costs less than $25,000 (ex GST) and was purchased in 2019
- the business has an aggregated group turnover of less than $10 million
- the asset was first used or installed in the year of claim
- the asset can be new or used
- there is no limit on the number of individual assets that can be claimed. As long as each asset costs $25,000 (ex GST) or less.
Good news for small businesses – including yours!
If the Coalition Government is re-elected, the instant-asset tax write-off for small business will continue until June 30, 2020. Increasing the asset amount to $30,000 per asset will expand the scheme’s reach and stimulate more purchases from small businesses.
There’s still plenty of time for small business customers to take advantage of the scheme in the 2018/19 tax year.
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