Correctly using the tax break can propel your business forward with necessary assets while granting you greater cash flow too. Here are some quick facts regarding the new $20,000 tax reduction:
Am I eligible for the tax break?
Two primary factors determine eligibility: you must hold a current Australian Business Number (ABN) and your annual turnover must be under $2million. If you tick these boxes you should be able to access the tax write-off, no matter whether you are a small business or sole trader.
How do I get it?
Simply buy your chosen items upfront. You will be refunded the cost of the items as a tax write-off. Remember though that the tax break applies strictly to items relating to your business.
What can I buy under the new tax reduction scheme?
So long as your purchased items relate to your business the possibilities are broad. A few suggestions include a car, thermomix, tables and chairs or power tools. The tax break applies equally to goods that are brand new or second-hand.
What is not covered under the tax break?
You cannot access the tax refund for any non-physical items. That means the likes of marketing, stock and software developed in-house are not covered.
Do I have to use the full $20,000 reduction?
No. You can claim anything up to $20,000 so there is no limit to what you can purchase under that figure.
My purchase(s) will come to over $20,000. Can I still catch some deductions?
Yes you can. You can pool together any items over $20,000 and these will be depreciated at the same rate. Depreciation rates are: 15 per cent in the first income year and 30 per cent per annum subsequently.
A further sweetener to the small business tax write-off is added by a lower tax rate. If your business has an annual turnover of less than $2million, your tax rate is down from 30 per cent to 28.5 per cent. In other words, you can now enjoy the lowest small business company tax rate in over 50 years.