20K Australian Small Business Tax Benefit
MOUNTAIN SHADE SUPPORTS AUSTRALIAN SMALL BUSINESS
Here is an excerpt from the Australian Governments announcement of the $20,000 tax benefit.
One of the biggest announcements in last year's budget was the temporary increase to the instant asset write-off, allowing small businesses to claim back purchases of up to $20,000.
So is this just free money? How can you take advantage of the new scheme?
Take a look at the key points of the $20,000 instant asset write-off.
Businesses with an annual turnover under $2 million can claim immediate tax deductions for as many sub-$20,000 purchases as they make between 7:30pm on budget night and June 30, 2017, rather than having to claim those purchases as deductions spread over several years.
This is a huge increase from the current instant asset write-off threshold of $1,000.
The Federal Government has allocated $1.75 billion to fund the scheme, which will run for the next two years.
Who is eligible?
The $20,000 tax break applies to businesses that can demonstrate ongoing activity via quarterly Business Activity Statements, Small Business Minister Bruce Billson said.
The business must be actively trading to be eligible for the break.
"If you run a cafe, it might be new kitchen equipment, or new banner flags or temporary shade for your customers," Mr Hockey said in his budget night speech
"If you're a tradie, it might be new tools or a computer or safety equipment such as a Aust Standards Approved marquee when on site for the portable office.
"Cars and vans, printed marquee's, kitchens or machinery ... anything under $20,000 is immediately 100 per cent tax deductible from budget night."
In other words, any asset involved in running a business is covered by the scheme.
Assets over $20,000 are not eligible for the instant tax write-off, but can be fully written off over a longer period.
Any assets over $20,000 can be added together and depreciated at the same rate. These assets are depreciated at 15 per cent in the first income year, and 30 per cent per year thereafter.
If the value of the pool is below $20,000 until the end of June 2017 it can be immediately deducted too.
Software purchased for business use, for example,an
account-keeping program, can be claimed.There are a few items not deductible, including some horticultural plants and any software developed in-house by a business.
Accountants have also warned they expect the ATO to closely monitor the number of Australian Business Number (ABN) applications, to keep an eye on any attempt to rort the scheme.
** This is general and sales information gathered from the internet and created by Mountain Shade and is not to be used to replace your own financial advice from an accounting or legal professional.