The $20k asset write-off as well as promising to lower general tax rates for small businesses was one of the major platforms that the Treasurer called his 10-year enterprise tax plan, which was introduced in the 2016 budget. The major change to the $20k asset write off is that in the 2017 budget it is available to all businesses up to and including $10 million annual turnover. In the 2016 budget, it was limited to businesses up to and including those with a $2 million annual turnover.
Prior to the 2015 budget which is the first time this measure was introduced, the deduction was $1000. In simple terms what this tax measure does is that for every $20,000 asset you purchase you can claim an immediate 100% deduction, instead of spreading it out over several years.
It seems that most small businesses intend to spend the money in two areas. The first area is improving the businesses IT hardware and the other area seems to be a large number of eligible businesses will be purchasing a new vehicle. When looking at either of these purchases, or any other eligible purchasers, it is wise to seek advice from your accountant to first of all ensure that your purchase is eligible for this measure and second of all to ensure that peripheral costs, like software, are also eligible for some kind of tax deduction before they result in a cost blowout.
A lot of businesses who are supplying items to claim this tax deduction are also offering extra incentives for you to purchase their products within the time allowed. However, a large word of caution, if your purchase is not going to increase the businesses bottom line and profitability then do not purchase it. This particular tax measure should be used by business to increase their profitability overall and having a $20,000 deduction that is actually a drain on the business is not really worth it most business people would say.
The ATO has published guidance on the budget proposal which should be taken into consideration before any purchases are actually made. The ATO has also set up a small business Newsroom service to help small business owners work out if what they are purchasing is first of all tax deductible, and second of all if it is eligible for the $20,000 deduction. Small business owners should look into this service and what information it gives. The newsroom pretty much replaces the receiving of general small business tax information by mail which until now is the way the ATO has communicated with small business owners, the newsroom can be found here ato.gov.au/sbnews
This is an excellent example of a qualifying tax deduction made by EMPR, a business that sells HPE ProLiant Servers, if you were to purchase one of the selected servers during the promotion period then as well as being eligible for the $20,000 deduction you will get a bonus gift card and go into a draw to win a gaming console.
Always remember that when talking about tax deductibility, businesses such as EMPR provide information only, readers should seek their own tax advisors recommendations at all times.
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