How SMEs can take advantage of the instant asset write-off

If you’re planning to give a small business a boost, the instant asset write-off is a great way to tax effectively fund the expansion and efficiency of the business and, at the same time, reduce taxable profits.

With recent research from H&R Block and Officeworks showing that fewer than half of all small businesses have taken advantage of the instant asset write-off, and a quarter of small businesses are unaware that the tax break has recently been extended to cover all capital items costing up to $30,000 each (previously $20,000, then briefly $25,000), its worth highlighting just how valuable the instant asset write-off can be to small businesses.

Amongst the top assets that many small businesses can use the tax break to acquire are the following:

Computers, laptops and other IT equipment
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.

Motor vehicles
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 your client is a trader looking for a better ute, an Uber driver looking for a nippy run-around or a delivery driver looking for a new van, the instant asset write-off could deliver a tax effective boost to business.

Office equipment
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.

Boost retail premises
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 are the following:

  • cash registers and other POS devices
  • delivery vans
  • store fittings and fixtures
  • computers, laptops and tablets
  • in-store security systems .

Tools of your trade
Whether you’re a plumber, electrician or carpenter, if tools are needed to undertake your job, an immediate tax deduction for the cost of upgrading could be available.

It’s not just tradies who can benefit. For example, if you’re a dentist you could invest in a new dentist’s 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.

Mark Chapman, Director of Tax Communication, H&R Block

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