Thanks to changes made to the 2019-2020 Australian Federal Budget small businesses that turn over less than $50 million can now claim instant asset write-offs for assets costing less than $30,000. If this is relevant to you, no matter what stage of growth your business is in, you might be asking yourself what does this tax write off mean for me? And what can it do for my business? Here are a few things to know before taking advantage of it.
What is the small business tax write off?
This tax write off allows small businesses to claim deductions for equipment purchases such as vehicles, tools and office equipment. As long as the asset is used in the income year you’re claiming for and is priced under the threshold, you can claim the business portion of use in your tax return for that financial year.
The amount you can write off instantly depends on when the asset was bought and which threshold it sits under, it is important to note that the threshold changes, so it is best to check the ATO website for any updates. Keep in mind that if your company uses the asset partly for business, then only the business portion of the cost can be claimed as a tax deduction.
So, now that you know the details, you’ll want to know the claim process and it’s quite easy. You can claim the instant asset write-off on your tax return that financial year under ‘Small business entity simplified depreciation‘, if things get confusing your accountant can support you with this claim.
Before you make any big purchases approach your accountant or loan broker to discuss asset finance solutions and gain advice on the best choice. They can let you know what type of loan will work best for you, if it will affect your business finances and if the benefits are worthwhile short term and long term.
If you and your broker decide this is the right decision for your small business the next step is deciding on the best loan options for you. SFE Loans offer asset and equipment finance and support to help your business prosper into a well-oiled machine. If you need more information, we’re here to help! Get in contact with us today to discuss how making strategic lending choices can support the future success of your business.
*This article is not classified as certified tax advice.
You should seek independent advice from your tax practitioner and if you’re looking for a trusted advisor contact us for our recommendations.
Sources: Australian Taxation Office, Australian Federal Budget 2019-20.