At Servico, we can assist you to ensure you are operating at your highest efficiency. Part of this is in selecting and purchasing the right equipment. Fortunately the current $20,000 tax break on equipment purchases is still in place – until June 30th 2017. Now is the time to make that purchase on new equipment – Binders, Shredders, Folders, Guillotines, Staplers, Whiteboards, etc.
To assist you today we provide information on the Federal Government Tax Break and how your business can benefit.
Here is the original ABC Press Report on the Tax Break available – Until June 30th 2017.
$20,000 small business tax break explained
One of the biggest announcements in 2015’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.
What is the $20,000 tax break?
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 was and is a huge increase from the previous instant asset write-off threshold of $1,000.
The Federal Government allocated $1.75 billion to fund the scheme, which will run for the next two years. [Note: It finishes on June 30th 2017!]
Who is eligible?
The $20,000 tax break applies to businesses that can demonstrate ongoing activity via quarterly Business Activity Statements.
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 tables and chairs,” Mr Hockey said in his budget night speech in 2015.
“If you’re a tradie, it might be new tools or a computer for the home office.”
“Cars and vans, kitchens or machinery … anything under $20,000 is immediately 100 per cent tax deductible from tonight.”
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.
There are a few items not deductible, including some horticultural plants and any software developed in-house by a business.
Software purchased for business use, for example, an account-keeping program, can be claimed.
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.
What else do you get?
In addition to the instant asset write-off, companies with annual turnover of less than $2 million have had their tax rate lowered, from 30 per cent to 28.5 per cent.
This is the lowest small business company tax rate in almost 50 years.
Unincorporated businesses, such as sole traders, partnerships and trusts, will also get a 5 per cent tax discount from July 1 up to $1,000 a year.
What does this mean for you?
“If you currently run or you are thinking of starting a small business, now is the time to act”, according to ABC’s AM program host Michael Brissenden.
“The small business package is extraordinarily generous. If you were ever thinking about opening a cafe, do it now,” Brissenden wrote last night.
“Buy as many espresso makers, fridges, photocopiers and lawn mowers as you like, and claim an immediate tax deduction until 2017.”
Check this chart – it’s accurate…
Finally, call us at Servico regarding your new equipment requirements. Quality brands such as Fellowes, Dahle, Ideal and Ledah with effective warranties are all available now to be purchased and installed BEFORE June 30th 2017.
Servico – We keep you running.