The Australian Federal Budget 2015 delivered by Treasurer Joe Hockey announced a series of key surprises which will allow small business to work smarter and more efficiently with new technology.
Instant Asset Write Offs For Depreciating Assets that cost less than $20,000. This ruling came into effect on May 12 2015 through to June 30 2017. Prior to this, small businesses were eligible to claim an immediate deduction off the cost of assets purchased for business purposes less than $1,000. The threshold of $1,000 will revert back after June 30 2017.
All small businesses will receive an immediate tax deduction on items with a value of up to $20,000 and get an immediate tax deduction. This limit applies to each individual asset and there is no limit to how many items it can be applied to. This includes new and second hand assets. If the small business is registered for GST then the GST exclusive amount is taken to be the cost of the asset. If the business is not registered for GST, then the GST inclusive amount is taken to be the cost of the asset.
The new immediate write off threshold applies to all types of depreciable assets such as tradesmen’s tools, machinery, motor vehicles, storage sheds, furniture and equipment used in the business that has a limited effective life and will decline in value over the period of use.
Note: This is not an allowance or cash refund from the Australian Taxation Office and it only applies to businesses with an annual turnover under $2 million. By claiming the tax deduction, this reduces the taxable income and tax payable.