What's New

What you need to know about the Small Business $20,000 asset write-off

Eligibility

To be eligible you must be a 'Small Business Entity' which is defined as a business with an annual aggregate turnover of less than $2 million. The immediate write-off (or tax deduction) is available for assets purchased and ready for use from 7.30pm on 12 May 2015 (Budget announcement) through to 30 June 2017. In order to take advantage you must not only purchase an asset during the time period under $20,000 but you also need to use the small business simplified depreciation rules for income tax purposes.

What is included?

The $20,000 threshold replaces the $1,000 threshold that historically applied to Small Businesses. Both new and second hand assets are eligible and items such as computers, reformer beds, ultrasound machines and other equipment are all included. Items purchased as trading stock however are not eligible.

If your businessis registered for GST and the asset is used exclusively in the business, the cost of the asset can be up to $21,999 (GST inclusive) and still qualify, as the threshold is based on the depreciable cost of the asset, which does not include GST.

The threshold is on a per asset basis, which allows for multiple assets to be purchased and the immediate deduction can be claimed for each asset.

Changes to work-related car expense deductions

In the 2015-16 Federal Budget the Government announced changes to simplify work-related motor vehicle deductionsfor individuals and partnerships.

Previously four methods were available, being:

  • Logbook
  • Cents per kilometre
  • 12% of original cost
  • 1/3 of actual expenses

The changes that came into effect from 1 July 2015 have abolished the '12% of original cost' and '1/3 of actual expenses' methods.

Additionaly, the cents per kilometre method (with the exisiting 5,000km cap) has been changed; taxpayers are now required to use a standard rate of 66 cents per kilometre, rather than a rate based on the engine size of their car. While the changes have simplified the method, they may have an adverse effect on some taxpayers. Drivers of larger cars may see a reduction in the amount of the deduction they are able to claim.

The logbook method remains unchanged.