Senate passes $20000 instant asset write off the extension

Senate passes $20000 instant asset write off the extension

After a brief wait and long deliberation in regards to making the $20k write-off a permanent feature of the tax system for small business there is welcome news for small business operators and startups. There are around 3.3 million small businesses who have a turnover of less than $10 million in Australia and now they have the freedom to purchase and expand their asset as they are eligible for an instant write off of $20,000 on eligible asset purchases. The Senate on 12^th of September 2018  re-instated the $20,000 instant asset write off for the next financial year.

What can you claim?

Under the instant asset write off eligible businesses can claim many assets including cars, IT equipment, laptops, office equipment, medical equipment, Tools, Machinery, Printers, movable furniture and so on. You need to ensure that the value of the assets is below $20,000 either inclusive of GST or excluding GST. The asset must be used or installed for use within the business before 30^th of June 2019. Your business must qualify as a “Small Business Entity” which means that you should operate your business for the whole or part of the income year & your ‘Aggregate Turnover’ should be less than $10m.

Why it is necessary & what’s benefit to your business?

It is important to know how you can take advantages to maximize your deductions this financial year especially for those who have not previously accessed or are aware of this concession

The government is looking forward to achieving the following things bypassing of this extension –

• The need for this initiative to be made permanent particularly for small business so that they can grow, create more opportunities and expand their business.
• Motivate and incentivise investments by small business to stimulate the economy.
• Invest in themselves and attract more and more customers as will help to create more local jobs and opportunities for more Australians.
• Small businesses form a major part of Australian economy and are the backbone of the economy. A stronger small business community means a stronger economy and more jobs.
• Providing small businesses with some tax relief for the FY 2019.
• Incentivise new businesses by giving them an immediate tax break.

New business and startups find it difficult to gain a foot in the market since they have drained out their savings to invest in the new establishment. It takes a while before they get all systems in place and run a profitable business. This initiative, provides a welcome relief to new startups too, whereby investments below the value of $20,000 will be deductible instantly.

Assets that cost more than $20,000 need to be written off using the general small business pool and over time only. If the balance of this pool is below $20,000, then the accelerated depreciation rules could be used to write the balance of the pool off.

A One Accountants, represents many small businesses and has experience dealing with circumstances that form part of the day to day activities of a small business accounting and bookkeeping chores. Feel free to contact us on 03-86091889 if you may have any questions pertaining any bookkeeping, accounting or tax aspects of your small business. We are also Xero certified, Quickbooks pro and MYOB experts and can help with general accounting, bookkeeping or tax related matters.