If you’re looking to expand or improve your business, you may have had your eye on a major asset. Thankfully, before June 30 is a prime time to invest for small businesses, due to a current tax scheme.
Should you be unaware that asset write-offs existed for purchases up to $30 000, you’re not alone. Nearly two-thirds of Australian businesses are under-utilising the scheme – attributed to a lack of knowledge, capital and clarity on how it works.
Before you go writing yourself off for not having cash in the bank – loans are available. You too can take advantage of this small business tax break.
So let’s tackle your biggest questions so you can unlock this business opportunity and potentially get more money back in your pocket, this financial year.
What Is The Instant Asset Write-Off Scheme?
This scheme has been around for several years and allows any company earning up to $50 million in turnover, to write-off new and second-hand purchases, up to $30 000 (+GST). This genuine tax break supports small businesses with both cash flow and getting ahead long-term. It makes purchasing high-investment business improvements and upgrades possible, without sacrificing one’s livelihood to do so.
How Is This Different From Before?
To fully appreciate the benefits of this scheme, know that prior to 2015, any purchase over $1000 could not be claimed in entirety. Instead, it fell under the small business entitlements and depreciation pool, where you could claim 15% in the first year and 30% off the remaining balance for every consecutive year until the balance was effectively “written off” over eight years.
The current scheme allows you to reduce your taxable income and tax payable in the same financial year you purchase, by enabling you to claim the full depreciation in one lump sum – providing you meet the criteria.
Am I Eligible?
To unlock the full benefit of this write-off, your annual business turnover must not exceed $50 million. If you meet this qualifier, then any asset purchase $30 000(+GST) or less is claimable.
If the asset is greater than $30 000 and is a legitimate work purchase, it can still be claimed against the business and will be governed by the depreciation system detailed above.
For an eligible asset to be written off, it needs to be purchased before the end of the financial year (June 30th). It doesn’t have to be delivered or in use, but the transaction does need to be made.
What Can I Claim It On?
The write-off applies to individual purchases related and used in business operations. Assets can be both brand new or secondhand. They can include tools, equipment, work vehicles and trailers, machinery, computers, website and software development, office furniture, air conditioners, IT hardware, signage and more.
Note: If your asset is shared between business and personal use, only a partial tax relief is granted. For example, if you purchase a car that is used for business 80% of the time, you can claim an 80% deduction of its total value.
How Do I Make This Work For Me?
Before making any considerable purchases, it is advisable to consult your accountant or tax professional on the eligibility of the asset and the impacts and benefits to your business.
If you find that your finance or cash flow may be affected from the expense of an asset, our team of finance brokers are available to discuss how we can make purchases viable for you this tax season.
A business loan can ensure you don’t miss this opportunity to lower your taxable income and tax payables, whilst investing for future growth. Our loans are quick, easy and will bridge the cash flow gap so you can have the capital, without the headache – and make the necessary business purchases before June 30.
Capitalise on this smarter way to grow your business and speak to our Rostron Finance professionals today: 1300 70 70 79.