With the end of financial year fast approaching, small and medium-sized businesses are being reminded they could be eligible for an instant asset write-off of up to $30,000.
The Federal Government boosted the threshold on the Instant Asset Write-off Scheme last month, in a move designed to stimulate growth for small and medium-sized business. The program is for businesses with an annual turnover of up to $50 million (up from $10 million previously), and it can be used multiple times for multiple assets.
The scheme also allows business owners to immediately write off depreciable assets that cost the business less than $30,000 plus GST. Owners can further invest in their businesses, for example, if they’re in need of a new work vehicle, machinery, IT equipment, tools, even office furniture or air conditioners. By taking advantage of the scheme before 30 June this year, businesses can invest in equipment they need now and claim the full purchase price as an immediate deduction this financial year.
This is for new or second-hand assets “first used or installed, ready to use” between 3 April 2019 and 30 June 2020. If businesses are thinking of making a purchase, they ought to do it now, before end of financial year – but seek help from a professional to make sure they’re not directly affecting business cashflow.
Assets that are eligible include:
- trucks and trailers
- light commercial vehicles
- business vehicles.
General equipment and tools:
- forklifts and excavators
- medical and dental
- IT hardware such as desktop computers, servers and printers.
- general plant equipment
- office or shop furniture and fittings
- air conditioners, display screens, kitchen equipment, signage.
It is important to note that Government increased the threshold on the scheme initially from $20,000 to $25,000, then to $30,000 just last month. According to Treasurer Josh Frydenberg, the boost opens up the write-off to an additional 220,000 businesses, taking the total number eligible for the deduction up to 3.4 million.
This scheme is also a really good opportunity to stimulate the economy, with the flow on-effects felt by all businesses. If business owners were interested in taking advantage of the scheme, a finance broker could assist in getting the best deal on a loan to purchase the asset. By using this incentive, you could claim depreciation on business as a one-off lump sum instead of claiming smaller tax deductions over a number of years.
With access to ready funds, you can preserve cash flow while the write-off scheme helps you reduce taxable income this financial year.
Robert Perks, Managing Director, Fifth Avenue Finance Group