The accelerated depreciation write-off for assets up to $20,000 (Ex GST) acquired by small businesses was announced in the May 2015 budget. As a boost for small businesses, the Government has extended access to a number of small business tax concessions by increasing the annual turnover eligibility threshold from $2m to $10m. These measures have applied from July 1, 2016.
From a tax planning perspective some business owners may look at the timing of their expenditure to maximise the tax benefits of the instant write off.
Key features of the Write-Off Rules
- The asset can be new or second-hand.
- The deduction is claimed in the income year in which the asset is first used or installed ready for use.
- The write-off is for the ‘taxable purpose proportion’ of the asset which is the proportion of the asset’s use in an income year for producing assessable income.
WARNING : While the $20,000 accelerated depreciation incentive sounds attractive to small business owners, spending up to $20,000 on an asset to simply get a tax deduction may not be prudent. As detailed above, there are some specific rules around this concession so we urge you to contact NCA before committing to a major asset purchase.
The write off does not cover certain types of assets please contact us for further details if you are unsure.