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If you own or run a small business, one of the best tax breaks is the instant asset write-off. This allows you to buy items of capital equipment and then immediately write off the cost against current year profits.
The tax break has now been made even more attractive. In the recent Federal Budget, the government announced that the dollar limit for qualifying capital assets has gone up to $30,000 with effect from 2nd April 2019 (it was previously $25,000 from 29th January 2019 and before that it was $20,000), meaning that any item costing up to that limit can be written off straight away. In addition, the tax break has been extended through until 30 June 2020, a year later than originally planned, so there’s still plenty of time to take advantage.
Better still, the definition of a small business has been expanded meaning that thousands more Aussie businesses now qualify for the write-off. From 2nd April 2019, businesses with an aggregate turnover of up to $50 million can qualify for the scheme (previously, only businesses with a turnover up to $10 million qualified).
If you’re planning to give your small business a boost, this is a great way to tax effectively fund the expansion and efficiency of your business and, at the same time, reduce your taxable profits. So, what are the top assets that many small businesses are looking to use the tax break to acquire?
By far the best-seller for small businesses using the instant asset write-off, investment in new IT infrastructure is a no-brainer for many businesses looking to tax effectively fund growth.
Too many businesses rely on old, slow and unreliable computing equipment that reduces productivity as staff deal with delays caused by screens freezing and machines breaking down. So, it makes perfect sense to get an immediate deduction for the cost of new IT kit. Why not invest in tablet computers or laptops so staff out on the road or working from home can stay in touch with the office? Or perhaps invest in fast, lightweight laptops to replace those 10 year old desktops that take half an hour to start up in the morning?
The ability to immediately deduct the cost of new motor vehicles has always been one of the most attractive features of the instant asset write-off. Now, with the threshold rising to $30,000 per asset, the range of new and second vehicles that could qualify for a deduction has increased greatly. So, whether you’re a trader looking for a better ute, an Uber driver looking for a nippy runaround or a delivery driver looking for a new van, now is the time to make that purchase.
If you’re looking to upgrade your office, now is the time. Items such as office chairs, desks, cabinets and shelves could qualify for the write-off but don’t be afraid to think outside the box. If the office canteen needs a new coffee machine, that will qualify. So will a new sofa and TV set for the office reception or the staff break-out room. If meeting rooms need jazzing up, think about buying some new paintings or sculptures.
If you’re in the retail trade, the instant asset write-off is great for tax effectively building a retail environment that will wow your customers. Amongst the items you could look at claiming, think about the following:
Whether you’re a plumber, electrician or carpenter, if you need tools to undertake your job, get an immediate tax deduction for the cost of upgrading.
It’s not just tradies who can benefit. For example, if you’re a dentist you could invest in a new dentists chair for patients or new x-ray equipment. Opticians can upgrade to the latest eye-testing kit. Provided the cost of each item is less than $30,000, it’s claimable in full, this year.
Here at H&R Block we recognise that running a small business whilst rewarding, can also be hard at times.
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