Good news for small, and now medium-sized businesses, the Australian Government has increased the instant asset write-off amount from $25K to $30k until 30 June 2020. They have also expanded the annual turnover threshold from $10 million to $50 million to include medium-sized businesses. This means more than 22,000 additional businesses will now be able to take advantage of the instant asset write-off scheme.
These changes will give small to medium-sized businesses the opportunity to instantly deduct multiple asset purchases costing less than $30K from the 2nd of April 2019 until 30th June 2020. For the full details, read the Budget 2019/20 report.
How does the $30K Instant Asset Tax Write-Off Work?
When a small-to-medium sized business purchases an eligible depreciating business asset under $30K, they can claim the full cost towards reducing the taxable income for that financial year. This can result in thousands of dollars saved in tax payable for that business. Let’s explain this further by using an example of a hypothetical business in which this tax incentive could apply.
Example: Joe’s Fruit & Vege Market
Joe Smith owns a company, Joe’s Fruit & Vege Market, through which they operate several store’s in Perth, employing 12 staff. Joe’s Fruit & Vege Market has an aggregated turnover of $1.2 million and a taxable income of $105K for the 2018-19 income year. In order to move stock efficiently, Joe has decided to purchase a new CAT 1.8 tonne LPG forklift for one of his stores, priced at $23,990, exclusive of GST.
Under the new $30K instant asset write-off scheme, Joe’s company is eligible to claim an instant deduction of $23,990 for the purchase of his new forklift. This means that Joe can use the cost of this asset purchase to decrease his companies taxable income and thereby decrease his tax payable. This can potentially lead to thousands of dollars saved and increase his available cash flow.
*This example is general in nature and only used to demonstrate how the accelerated depreciation scheme may apply to a business. This doesn’t take into consideration a business’s personal situation or circumstances, neither should this be taken as financial or tax advice. We recommend businesses seek professional advice from their licensed financial advisor or accountant for eligibility.
$30k Instant Tax Write-off FAQ’s
Does my business qualify for this tax benefit?
If you business has an annual turnover of less than $50 million, then your business qualifies and can instantly write off assets purchased this financial year costing less than $30,000.
What kind of assets can I claim a deduction on?
The scheme refers to any asset involved in running a business. This applies to new and second-hand products.
Does the $30K include or exclude GST?
As summarised by the Australian Taxation Office:
- If a business is registered for GST, then the GST will be excluded from the cost of the asset.
- If a business is not registered for GST, then the GST will be included in the cost of the asset.
The 2018/19 Financial Year is coming to an end, and now is the perfect time to purchase or upgrade your equipment with the current $30K instant asset write-off scheme.
We are offering a selection of new forklifts for a special price of under $30K, perfect to save up to thousands of tax payable dollars. Click here to find out more.