Tax Planning – If you operate a business, you may be able to claim more tax back on that new ute than you thought. In the 2016-17 budget, the Government announced a change in the asset write-off scheme, to assist in the reinvestment into the machinery and other assets of small businesses. You may have heard of the write-off scheme before, but up until the start of this financial year, it may not have been applicable to you – it is now time to re-evaluate. Previously available to businesses with an annual turnover of under $2 million, the scheme has been extended to those businesses earning under $10 million. This is an alteration that was set to affect over 90 000 additional small businesses and your business could be one of them. So how could this change affect your business?
The tax write-off allows businesses within the turnover limit to deduct the full cost of a new asset (like a car or industrial power tools) in the year of purchase instead of lodging it as a depreciating asset. The allowance for this extends to assets with a total value of under $20,000. The asset must be considered a depreciating asset which was either purchased and used or installed ready for use in the year of claim. If you have purchased a new vehicle or machinery this year, double check your turnover because you may be able to take advantage of the tax write-off scheme. You may also pool other depreciating assets together and write-off the balance if the total value is below $20,000 before other depreciating deductions are applied. In turn, the money gained from these write-offs can be used to improve the maintenance of your machinery or assist in upgrades and new investments.
This change is part of the Government’s ten-year Enterprise Tax Plan which was designed to help particularly small businesses in creating jobs and growth. If you would like to reduce your net profit for 2017 financial year, you have until the 30th of June 2017 to purchase assets that will be deductible under this scheme. If you would like to know more about instant asset write-off or need help with accounting and tax, don’t hesitate to contact our team at Tradies Accountant.