Doors closing soon on $20,000 tax deduction

There’s less than 4 months left if you want to claim a $20,000 tax deduction in your business.

If you are a business with an annual turnover of less than $10 million (this changed as part of the 2016 Federal Budget), you can claim the entire cost of an asset for immediate write off if its cost is under $20,000, even if the asset is old or second hand!

Closing June 2017

The government has not extended the time frame for the scheme so currently this is coming to an end on June 2017.

All depreciating assets are included under this immediate write off including:

• Computer hardware – computers, printers, phones, laptops, etc
• Tools and equipment
• Vehicles
• Shopfront fit-out assets – air conditioners, signs, furniture and fittings

Example: Pamela and her loader

For example, Pamela bought a second hand skid steer loader for $17,000 on 28 May 2015 which is used solely in her landscaping business. As the depreciating asset cost less than $20,000, Pamela will be able to claim an immediate deduction for this asset.

A couple of things to remember.

1. If you’re registered for GST, then the GST exclusive amount is taken to be the cost of the asset and if you’re not registered for GST, then the GST inclusive amount is taken to be the cost of the asset.
2. Businesses also need to ensure that they only claim a deduction to the extent to which the asset is used in an income earning activity for a taxable purpose. So if you’re not using the asset 100% in the business you shouldn’t claim 100% of the write off.

For further assistance or questions on claiming this tax deduction ask our accountant.