|June 7, 2017||0|
Don’t really understand what the $20,000 instant Tax write-off is all about?
You’re not alone!
Following a national survey by Officeworks and H&R Block, it was revealed that 78 per cent of SMEs don’t fully understand what the tax break entails.
A lot of small business owners put tax in the ‘too hard’ basket. However, being more proactive can really benefit their business and put money back in the kitty courtesy of the Tax Office
Sadly, it doesn’t mean that you will get the cash back from the ATO straight away.
According to business.gov.au, “it means that you can reduce your taxable income, and your tax payable, in the financial year that you bought and installed them.”
Generally speaking, the deduction is primarily intended for physical assets. Things Like:
There is no limit to how many assets you can claim the deduction for. However, each one must cost less than $20,000 and be used for business purposes
According to the ATO website, the following are excluded from the instant deduction scheme:
• Assets that are leased out for more than half of the time on a depreciating asset lease
• Assets already allocated to a low-value pool
• Horticultural plants, including grapevines – these are covered by specialised deductions
• Capital works
You may be tempted to try and double dip by claiming the initial write-off and then depreciating the asset in subsequent tax years, but this is a no-no the tax office will likely clamp down on in this and future tax years.
Essentially, the write-off enables you to claim the depreciation deductions of that asset in one go immediately up-front against your income
If your business is likely to need some assets in the near future you may want to bring these purchases forward and purchase them this month so that you can claim the write off in this financial year. ‘That’s great’ you’re thinking but cash savings do not allow right now.. don’t panic we can get it financed for you at low interest repayments.. Ask Us How