If you’re a small business owner, read on.
Here’s how it works
Normally, asset depreciation is deducted from tax bills over a number of years. This makes sense because, generally, an asset with a limited life doesn’t become valueless immediately after purchase, but rather its value declines gradually, year by year.
As of 12 May 2015, the government introduced a measure that allows small businesses to claim total depreciation for assets purchased up to $20,000 as one whole, upfront deduction in the first year. It’s not giving small businesses a larger tax deduction; it is just speeding up something what would otherwise be broken up over a number of years. That’s why it’s called “accelerated depreciation”.
Accelerated depreciation gives a small business the opportunity to get a boost in its tax return from claiming in the same year it purchased an asset instead of being restricted to doing it gradually.
What is a small business?
If a business has an annual turnover of less than $2 million then it is defined as a small business.
How long does it last for?
Accelerated depreciation became available on budget night on 12 May 2015 and will continue until 30 June 2017.
What does it mean for you?
If you are a small business owner, you can get an immediate cash flow benefit by purchasing a big ticket item between now and 2017 and claiming an immediate tax deduction on it. You can claim accelerated depreciation on more than one individual asset.
And if you want to claim in this year’s tax return, Betta get shopping!
For more information, visit the below links and always consult your accountant first.