From the 1st July 2012, small businesses can claim an immediate tax deduction for assets purchased costing less than $6500. This is an increase from $5000 when the initiative was originally announced. Most computers and IT equipment can be claimed under the initiative.
Who is eligible?
Small businesses with an annual turnover of less than $2 million.
What does this mean for you?
In previous years, depreciation of assets was pretty complicated for small businesses. Assets under $1000 could be written off, but those with a higher value had to be allocated to two different asset pools to depreciate at either 30% or 5% depending on the expected useful life of that asset.
From the 2012-2013 financial year on, all assets valued under $6500 can be written off immediately. Assets valued at $6500 or more can be depreciated in a single pool, with an exception for buildings.
Why were these changes introduced?
While small businesses do not need to pay a price on carbon directly, some costs of running a small business, such as electricity bills, will increase. This initiative was introduced to help small businesses adjust to increased costs. According to the Future Tax website , the changes are aimed at reducing compliance costs and improving cash flow for small businesses.
“All Australian businesses bear costs in meeting their tax obligations. For our estimated 2.7 million small businesses, this burden is proportionately greater than for larger businesses. Smaller businesses may also experience greater cash flow difficulties, which may be an impediment to their growth and expansion.”
Find out more
- Visit the Australian Government’s small business website.
- Call the Small Business Support Line on 1800 77 7275
- Talk to your accountant.
Will these changes affect the purchases made by your small business? Let us know your thoughts in the comments below.