funding4business – Instant tax deduction

Aussie small businesses – Instant tax deduction – asset threshold increase to $20,000 is now law

Small businesses can obtain an immediate tax deduction for assets acquired costing less than $20,000 purchased since 7.30pm 12 May 2015.

You can use the new threshold amounts in claiming deductions in your 2015 income tax return. The deduction is claimed in the income year in which the asset is first used or installed ready for use.

What’s changed?
The instant asset write-off threshold has increased to $20,000 (up from $1,000). This allows you to immediately deduct the business use portion of a depreciating asset that costs less than $20,000.

The changes apply to assets acquired after 7.30pm on 12 May 2015 until 30 June 2017,
on a per asset basis, so several assets each costing less than $20,000 would qualify,
to new and second hand assets.

Assets that cost $20,000 or more (which can’t be immediately deducted) will continue to be deducted over time using a small business pool.

The low pool value threshold will also increase to $20,000. This means that an immediate deduction is available if the pool balance is less than $20,000 at the end of an income year.

What’s not included?
There are a small number of assets that aren’t eligible for accelerated depreciation, for example horticultural plants that have specialised depreciation rules.

Record keeping
Just like any other business asset, you’ll need to keep records to support any claims for a deduction. This includes the ongoing business use of an asset and its eventual disposal. The ATO has a risk-based program to identify taxpayers that are not meeting their obligations and will take measured approaches to influence taxpayer behaviour.

Find out more at:- ato.gov.au
Growing Jobs and Small Business – expanding accelerated depreciation for small businesses