Did you know that if you act before 30 June 2019, you may be eligible to claim on the $30,000 instant asset tax write-off? If you think that sounds too good to be true, you’re not alone. Nearly two-thirds of Australian businesses are under-utilising the scheme, most likely due to lack of capital and clarity. Give us a call – we would love to show you how to take advantage of the scheme. We can help you to make the best use of this great little tax break with fast, easy access to working capital.
Tax breaks are few and far between so this could be of great benefit to your business! By taking advantage of this tax deduction you may be able to decrease payable tax. You can claim a deduction of up to $30,000 (raised from $20,000 as of the 2nd of April) for the business portion of each asset (new or second hand) purchased and first used or installed ready for use up until 30 June 2019. And simultaneously, you will be reducing your taxable income by that value. This will allow you to claim any number of asset purchases in your business as long as none of them exceeds $30,000.
So what does this actually mean?
If you own any assets that can devalue over time, you can claim on the annual depreciation of each item. This normally works on a percentage over time. So for example, if your restaurant refrigerator will last 10 years, you can claim depreciation of 10% of its total value per year. But with the Instant Asset Write-Off Scheme, you submit the total depreciation as a once-off claim, rather than working it off as incremental tax deductions year on year. This reduces tax payable for the current year.
Are you eligible for the Asset Tax Write-Off Scheme?
The scheme was recently amended to include businesses with a turnover of up to $10 million per year. This means that if your business turns over less than $10 million a year, you can claim the instant write-off. This applies to any business asset where the total value is less than $30,000.
Does that mean all assets?
No, sadly not all assets are included in the scheme so it is definitely worth consulting your tax accountant for a full list of eligible assets before going on a spending spree. That said, the list is far and wide and includes a sizable range of retail assets. These include work vehicles, trade tools, machinery, IT hardware (desktop computers, printers, photocopiers), office, studio, shop furniture, fittings, equipment storage (sheds and storage containers), kitchen equipment, signage, air conditioners and more.
What’s the fine print?
We highly recommend you discuss all your options with your tax accountant. All tax incentives carry quite a bit of fine print including guidelines like these:
- Your asset can be new or secondhand but should be a new acquisition of your business.
- Claims must be made within the financial year the asset was purchased.
- You can only claim for ‘taxable proportion’. This means that if your business uses it 50% of the time, that’s the percentage you can deduct.
- There is no limit placed on the number of assets deducted. However, no asset can exceed $30K.
Instant asset write-off thresholds
The entire cost of the asset must be less than the instant asset write-off threshold. See the ATO website for more information
|Date Range||Threshold for each asset|
|7:30pm (AEDT) 02/04/2019 to 30/06/2020||$30,000|
|29/01/2019 to before 7.30pm (AEDT) 02/04/2019||$25,000|
|7.30pm (AEST) 12/05/2015 to 28/01/2019||$20,000|
|01/01/2014 to prior to 7.30pm (AEST) 12/05/2015||$1,000|
|01/07/2012 to 31/12/2013||$6,500|
|01/07/2011 to 30/06/2012||$1,000|
So how do you make the most of it?
While the scheme is advertised as ‘instant’, this actually refers to the year the goods were purchased. So it’s not referring to the immediacy of the refund. This reality can lead to cash flow strains in the period between purchase and refund. So given the fact that time is ticking, a Beyond Merchant Capital cash advance is a total game changer! A cash injection will mean an instant release of pressure. This will give you plenty of time to think about how to use that cash in order to best serve your business. By receiving an unsecured cash injection in as little as 24 hours of application, you have enough time to upgrade equipment, improve your fixtures or whatever it is that you need to do to grow the success of your business.
The 30th of June is just around the corner. We are on standby, ready and willing to get your ball rolling with finance before the end of this financial year.
Speak with a lending specialist today about funding the growth of your business.