Is this your last chance to take advantage of the $20,000 Small Business Asset Write Off?

A couple of years ago the Government introduced this incentive to encourage small business to invest in assets and stimulate the economy; this tax break was finishing 30 June 2017… it has now been extended to 30 June 2018 in the May 2017 budget.

After 30 June 2018 you can ONLY write off an asset costing up to $1,100, not $22,000 ($20,000 + $2,000 GST).

How does it work?

Basically if your business (ABN holder) buys an asset (financed or purchased outright) up to $22,000 including GST by 30 June 2018 that purchase can be 100% claimed as a tax deduction in this year. Usually the tax deductions for assets are claimed over its life, which for a motor vehicle may be over 7 years or for a computer 4 years.

You don’t get $20,000 back on tax as a refund

The instant asset write off is a tax deduction that reduces the amount of tax your business has to pay. It enables your business to claim a deduction for depreciating assets in the year the asset was purchased and used (or installed ready to use). For example, if your business is in a company structure the most you will ‘get back’ is 27.5% (in 2016-17). If your business is likely to make a tax loss for the year then the bigger deduction might not provide any short-term benefit to you.

Q & A

Q:        Can I purchase for future use?

A:        No, the asset must be purchase and installed ready for use by 30/06/18

Q:        Do all business get this?

A:        No, small business with a revenue of less than $10m get it

Q:        Do second hand good qualify?

A:        Yes

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