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$20,000 Asset Write-Off for Small Businesses and why June is usually the best time to update assets due to EFY sales One of the fundamental small business policies in the 2015 federal budget, the $20,000 instant asset write-off scheme allows businesses to immediately deduct the full value of every asset purchased to the value of $20,000, as opposed to previously having to the deductions over a number of years. The scheme is currently available to businesses turning over up to $2 million annually, however, this threshold will increase to $10 million from July 1 this year. This is also a “limited time offer,” with the instant deduction applying to assets purchased until June 30, 2017. These measures essentially mean that a taxpayer can bring forward deductions where they wouldn’t otherwise have been able to do so.

What qualifies? What can I buy?

The following are examples of assets that qualify for the tax deduction:

• IT hardware such as desktop computers, printers, scanners and photocopiers, specialised office equipment.
• Office or shop furniture and fittings – office furniture, café tables and chairs, etc.
• Display screens, kitchen equipment, signage and air conditioners
• Work vehicles, such as a $19,999 Ute. Just wait for the EOFY Advertisements!
• Tradesmen’s tools and machinery
• Plant and equipment – CNC machinery, forklifts, excavators, skid steer, agricultural equipment, boom lifts, cranes, tractors etc.
• Sheds or storage containers for storing equipment.

The good news is that the above applies to new and second hand assets.

Tips:

This tax concession is ideal for those businesses that were planning to purchase assets anyway or have a real business need to update equipment. If it can improve your bottom line (net profit) then look at taking advantage of the opportunity. End of financial year is usually the best month to buy and update new / used assets due EFY sales. Dealers, department stores, tool stores, equipment suppliers heavily discount their goods to increase their sales for end of financial year reporting. So why not be part of this and take advantage. If you are thinking about updating in a few months, you might end up paying a lot more as opposed to making the purchase now. This could save you thousands of dollars. Plus there is the amazing $20,000 tax break if the asset being purchased is under $20,000.