Changes in the Federal Budget now allow small businesses with an annual turnover of less than $25 million to immediately write-off (expense) any purchases of items $30,000 and under, that they can make between 7.30pm on the 12th of May 2015 and June 30 2019.
This has been increased from the previous instant asset write-off threshold of $20,000 and presents small businesses with a significant tax write-off opportunity.
The total amount of the write off depends on the number of individual items that are under $30,000 excluding GST each. So if all items in a total purchase of $100,000 for example are all under $30,000 each, then the full $100,000 may qualify for the Instant Tax Write off.*
As a practical example “Joe Bloggs Grocery Supplies Pty Ltd” is presently looking to report a net profit for the June 2019 financial year of $60,000 – which they will end up paying tax of $16,500 on (at the adjusted company tax rate of 27.5%). If Joe was to purchase or finance (through a Chattel Mortgage) two items valued at $30,000 each totalling $60,000 prior to June 30 – he will completely offset his profit and not pay any tax for that year.*
This example would provide Joe with $16,500 of savings back to his business through reduced tax – which could be used to effectively purchase equipment or more than cover the interest costs to finance the equipment purchased.
How can we help you to get the Immediate Tax write-off:
You don’t need to have the cash to go out and buy equipment to get the write-off. Geared can assist you with a Chattel Mortgage Loan facility – which will allow you to qualify for the immediate tax write-off.* With a Chattel Mortgage, you “own” the equipment immediately, so it’s recorded in your business in the same way as a cash purchase. If financed through a Rental (Operating Lease) or Finance Lease, the purchase will not qualify for the Immediate tax write-off.
* This information does not constitute taxation advice and does not take into account your own individual financial circumstances. Please refer to your Accountant for taxation advice and information around whether you may qualify for the Instant Tax Write off.