Looks like small businesses have become big winners again in 2017's Federal Budget. They have continued the $20,000 instant asset write-off program for small businesses.
Want to know how you can take advantage of this deduction? Read on to learn all the major details – and what you need to do.
Getting to the Basics.
The basic premise of this write-off means you can utilise an instant tax deduction. This applies to small businesses that operated in the 2016-2017 income year. The limits of ‘small business’ are explained in the next section.
Some people make a mistake and believe this program is a rebate. For clarity: this does not mean you will receive $20,000.
Instead, the program means you can enjoy an instant adjustment to your taxable income.
For instance, let’s say your business enjoyed $200,000 of taxable income this year. You also purchased an item that qualifies for this program. As a result, your taxable income will adjust to $180,000 instead of $200,000.
More Details About the Write-Off.
According to the Australian Taxation Office, this claim applies to small businesses. To qualify as a small business, you have to meet a few limits on your earning.
Here’s a quick summary of the details.
Must Purchase an Asset Before 1 July 2017. The asset must directly relate to your business. It must also have a use that helps your business generate income. Examples include a new vehicle, new computers, tools, industrial equipment, signs, and more.
Asset Must Cost Less than $20,000. Just as in prior years, the limit cap for this write-off remains at $20,000. You cannot deduct items which exceed this spending cap. For more information on this limit, you can speak with a tax professional.
What the Write-Off Could Mean for Your Business
As you probably already know, the prior write-off amount for this deduction was only $1,000. As a result, many small business owners have taken advantage of this much higher benefit.
Check out a few examples of how your business can also take advantage of this incentive.
Of course, you don’t want to just buy for the sake of buying. As always, ask yourself “is this purchase something my business really needs?” If you’re unsure about the answer, you may want to take some more time before buying.
Don’t Miss Out on This Great Opportunity!
Remember, you'll have to adhere to a few further details to take advantage of this deduction. As mentioned, this benefit does have a few requirements for you as a small business owner.
Confused about whether or not you should take this deduction? The ATO also recommends seeking help from a registered tax agent. That way, you can make sure you’ll have everything you need before you file and submit.
Here’s to celebrating your own $20,000 instant asset write-off!