Are you thinking about purchasing new business equipment or other business assets? Maybe a new piece of machinery or computer hardware?

You might be able to claim an immediate tax deduction of up to $20,000 per new asset purchased on your business tax return for the current financial year by purchasing and getting new assets operational by 30 June 2017.

In a last minute deal, the government and Senator Nick Xenophon increased the ‘aggregated turnover’ threshold for claiming instant asset write offs on purchases up to $20,000 from $2 million to $10 million. This is not yet law but it is expected that the Bill containing these changes will be passed when Parliament next sits.

The deal will end on 30 June 2017, after which the instant asset write off of up to $20,000 reduces back to $1,000.
UPDATE (15 May 2017): In the new budget, the Coalition is proposing to extend the $20,000 limit until 30 June 2018 – great news!
UPDATE (9 May 2018): The Federal Budget 2018-2019 further extends this deal for assets purchased and made functional prior to 30 June 2019.

Interested?

There are some eligibility criteria to be considered:

1. • Your ‘aggregated annual turnover’ must be under $10 million. The Australian Taxation Office defines ‘aggregated turnover’ as “your annual turnover plus the annual turnover of any entities you are connected with or that are your affiliates”.
   • The asset must be purchased and either completely installed or in use by 30 June 2017, so make sure any contract wording supports this.
   • The asset must be for business use. If the asset is for both business and personal use, then the deduction can only be claimed on the percentage that is for business use.
   • The asset must be related to how your business generates income. You can’t claim the instant write off on purchases that are not relevant to your business.
   • Some assets purchases are not eligible, for example capital works. Check with us first to be sure your purchase will be eligible.
   • If you are registered for GST, the asset cost must be less than $20,000 excluding GST, if you are not registered for GST then the asset cost must be less than $20,000 including GST.

You can use use the immediate deduction for each individual item costing less than $20,000.

Remember the immediate deduction is not a refund but it does reduce the amount of tax your business will have to pay.

Call us on 03 5339 3200 to discuss whether this could be worth considering for your business.

Thanks for reading.

By Genna Kidd
 

The information contained on this website has been provided as general advice only.  The contents have been prepared without taking account of your personal objectives, financial situation or needs.  You should, before you make any decision regarding any information, strategies or products mentioned on this website, consult your own financial advisor to consider whether that is appropriate having regard to your own objectives, financial situation and needs.