Published on Aug 3, 2015
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In the 2015 Federal Budget, the government handed down what it called “the biggest small business package in our nation’s history” by passing legislation aimed at boosting businesses with a turnover of less than $2 million.
Two key measures of the package included the instant deduction on assets costing less than $20,000 and the 1.5% tax cut which would reduce the company tax rate to 28.5% for the 2015-2016 income year.
Hunter Region Business Enterprise Centre Inc. Manager Kerry Hallett said the measures were good news for small business; however, while the company tax rate cut was fairly straightforward, it’s important to read the fine print on the instant deduction.
“The introduction of the $20,000 write-off has no doubt motivated some small business owners to think about upgrading or purchasing new assets,” Ms Hallett said.
“If used appropriately, the deduction presents a great opportunity for small businesses and can be applied against a range of assets from the much talked about coffee machine to work vehicles.
“But there are certainly limitations and it’s important for business owners to understand the conditions contained in the legislation so they don’t get caught out.”
Ms Hallett said it was prudent to seek advice before making any significant purchase decisions.
“A $20,000 instant deduction is a great headline, but the details of the tax code do not necessarily make for thrilling reading,” Ms Hallett said.
“Some business owners may be mistaken in their interpretation of how the deduction can work for them – for instance it is not a dollar-for-dollar deduction.
“Spending a bit of time up front speaking with a business advisor can save a lot of hassle, not to mention money, in the long run.”
Need help with depreciation?
Free advice is available to businesses considering taking advantage of the $20,000 instant deduction passed into legislation in June.
Advance Cessnock City partners Hunter Region Business Enterprise Inc. and The Business Centre offer free advice and referrals on a range of business topics including taxation. Contact the BEC on 4936 2557 or The Business Centre on 4925 7700 to find out how they can help you.
The Australian Taxation Office also provides a range of on-line tools and support. Visit the ATO website for more information about the $20,000 instant deduction.
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