The end of the financial year is quickly approaching and getting your finances in shape will be top of mind for many busy professionals.
BOQ Specialist’s Gavin Brandenburger reviews the advantages of the current tax deductions for small businesses. “Working with dental, medical, veterinary and accounting professionals for over 25 years, we know that getting finances in order is one of many tasks on the ‘to do before 30 June’ list. To help make the process run smoothly we’ve pulled out some of the key points to consider in order to get the most out of the deductions,” Mr Brandenburger said.
Make the most of the $20 000 asset write-off
The financial head-start given to small businesses in the 2015-16 Federal Budget has been extended. The budget measure allows small business owners (with aggregated annual turnover less than $10 million) to claim an immediate deduction until 30 June 2019 for assets they start to use - or have installed ready for use - that cost less than $20 000.
Assets valued at $20 000 or more (which cannot be immediately deducted) can continue to be placed into the small business simplified depreciation pool (the Pool) and depreciated at 15 per cent in the first income year and 30 per cent each income year thereafter. The Pool can also be immediately deducted if the balance is less than $20 000 over this period (including existing Pools).
This measure will improve cash flow, providing a boost to small business activity and investment for another year.
Consider what assets are eligible
Equipment, such as new computers, medical equipment or any item that relates to a small business, is included. Items don’t have to be brand new; they can be second hand. Items to be claimed must be physical assets so marketing costs are not permitted. There is no limit on the number of items a business can claim. There are, however, a few depreciating assets that are not deductible under this tax initiative, including software developed in-house by a business. Business owners should seek their own advice from their tax advisor as to what is eligible.
Think about your finance options
Small businesses have to purchase and own the asset in order to be entitled to the immediate depreciation treatment. Financing the purchase via an asset purchase or chattel mortgage, credit card or overdraft/line of credit is also an acceptable option.
Be sure to act quickly
The measures will end on 30 June 2019. It would be worthwhile, therefore, to consider what assets you may wish to acquire and claim before the end of this as well as next financial year. Many small medical/dental/veterinary/accounting practices will fit the criterion to benefit from the tax break: all you need to qualify is an Australian Business Number and an annual turnover of less than $10 million. “This tax concession for small business owners is a simple and efficient way to boost the health of your business and it is important for business owners to investigate if their assets are eligible for the deduction before the end of the tax year,” Mr Brandenburger concluded.
BOQ Specialist - a division of Bank of Queensland Limited ABN 32 009 656 740 AFSL and Australian credit licence no. 244616 (“BOQ Specialist”).
The information contained in this article (Information) is general in nature and has been provided in good faith, without taking into account your personal circumstances. While all reasonable care has been taken to ensure that the information is accurate and opinions fair and reasonable, no warranties in this regard are provided. We recommend that you obtain independent financial and tax advice before making any decisions.