$20,000 asset write-off extended to businesses turning over up to $10 million
Last year’s Budget $20,000 asset write-off has been extended to businesses turning over up to $10 million from July 1 2016 – But if your business is in the up to $2 million category, you don’t have to wait!
One of the key small business policies in the 2015 federal budget, the $20,000 instant asset write-off scheme allows businesses to immediately deduct the full value of every asset purchased to the value of $20,000, instead of claiming the deductions over a number of years.
The scheme is currently available to businesses turning over up to $2 million annually, however, this threshold will increase to $10 million from July this year.
The government has not extended the timeframe for the scheme, which is still due to end of June 30, 2017.
According to Treasury data released by Small Business Minister Kelly O’Dwyer in December 2015, more than 99,000 small businesses had made claims under the write-off scheme between July and December 2015.
Small businesses claimed a total of $418.5 million under the scheme between July 1 and December 15. This compared to a total of $250 million claimed against the instant asset write-off scheme by 78,000 small businesses at the same time the year before when the depreciation limit was much lower at $1000.
In a statement accompanying the budget papers, Small Business Minister Kelly O’Dwyer said extending eligibility to the scheme “will help more small businesses to reinvest in their business and grow by helping them to replace or upgrade their machinery and equipment.
Peter Strong, chief executive of the Council of Small Business of Australia, told SmartCompany earlier this week he was hoping to see the turnover threshold increased to $5 million.
“One of the few negative things to come out of last year’s budget was there were businesses saying ‘I’d love to do that but I’m out of the turnover threshold’,” he said.
“It would make a big difference.”
Additional tax concessions available
The government also said in the budget lifting the small business entity threshold will give more small businesses access to a host of other tax concessions.
These concessions include simplified trading stock rules, which give businesses the option to not carry out an end-of-year stocktake if the value of their trading stock has changed by less than $5000.
These businesses will also have the option to account for goods and services tax on a cash basis and pay GST installments as calculated by the Australian Tax Office; to use a simplified method of paying Pay-As-You-Go installments as calculated by the ATO; and access to other concessions currently available to smaller businesses, including fringe benefits tax exemptions and the ability to immediately deduct professional expenses.
However, Minister O’Dwyer said the higher turnover threshold will not apply to access to the capital gains tax concessions for small businesses.