Here’s how your business can benefit from the $20,000 small business tax deduction.
Brisbane small businesses have welcomed news that they are able to claim immediate tax deductions for all purchases up to $20,000 from now until 30 June 2017.
In the past, small businesses have had to claim these purchases as deductions spread over many years. The deduction is available to businesses with an annual turnover under $2 million. The deduction is a significant increase from the current instant asset write-off threshold of $1,000.
Treasurer Joe Hockey said this move would go towards providing Australian small businesses with a much needed helping hand.
“This budget empowers small business to invest, grow and create jobs,” Mr Hockey told Parliament in his budget speech. “This will be of enormous benefit to their bottom line and help businesses with their cash flow. It means innovation, it means jobs. It means more money to invest and grow your business.”
Small businesses are able use the reduction for any items they purchase that are related to their business, even if the items are second-hand.
Hyundai Queensland state manager Terry Mulcahy says the news is welcome, but advises businesses to proceed with caution.
“Make sure you consult your accountant to find out exactly how much you can get back on different items,” he says. “However, if you are looking to buy something like a new car now would be the time to do it, because you get a tax deduction.
“I really think it’s good for small business, the budget itself was designed to put some fire power into the economy and it probably will.”
Computer Alliance managing director Jason Pushmann says the legislation will also be welcomed by Brisbane businesses who don’t fit into the ‘small’ category.
“Computer Alliance is not classed as a small business, as we make well over the cutoff figure, but the news is still very positive because it will have a residual effect,” he says.
“It’s good for the economy in general and I’ve heard nothing but positivity from the business community regarding the announcement. It’s rare that everybody, on both sides of politics, is in agreement.”
While legislation to give effect to the proposal has not yet been enacted, the legislation will backdate eligibility to Budget night, Tuesday 12 May 2015, so that assets acquired on or after 7:30pm (AEST) on that night will be eligible for the concession.
To keep up-to-date on the legislation, visit www.ato.gov.au.