Small businesses can claim an immediate tax deduction of up to $20,000 on certain assets bought between 12 May 2015 and 1 July 2017 under new provisions in the latest Federal Budget.
Under the new provisions small businesses can immediately write off most business assets under $20,000 using the Simplified Depreciation rules.
To use the provisions though, businesses not already using the Simplified Depreciation rules will need to opt in by pooling all existing assets into a SBE General Pool along with any new assets purchased for over $20k, and these will be depreciated at a flat 15 per cent over the first year and 30 per cent in subsequent years.
Those businesses with a pool balance worth less than $20,000 at the end of the financial year, can also claim a deduction for this balance.
In addition, the recent Federal Budget proposes to increase the small business threshold from an aggregated turnover (that is grouped with other associated businesses) of $2 million to $10 million from 1 July 2016.
Lucent Financial’s head of tax Matt Wingrave warns, “It’s important to understand that capital works assets are excluded from these provisions. These assets usually include costs relating to new buildings, building alterations, structural improvements (such as driveways or fences) and earthworks. These fall under their own depreciation rules and generally must be written off over a longer period of time than other depreciating assets”.
For more information about the $20,000 instant tax deduction or for an assessment of the most effective way to maximise this opportunity contact lucent financial (08) 8471 7007
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