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Business Tax Tips – Instant asset write off 2017 – $20,000 claim limit ends 30 June 2017

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Business Tax Tips – Instant asset write off 2017 - $20,000 claim limit ends 30 June 2017

Instant asset write off 2017 – $20,000 claim limit ends 30 June 2017

If you are a small business (aggregated turnover of less than $2 million) contemplating buying machinery or equipment, be aware that these are final months of the $20,000 instant asset write-off 2017.

With a final date of 30 June 2017, you may consider bringing forward any planned asset investments to the next few months – particularly in this current low interest-rate environment.

The ATO says

Small businesses can immediately deduct assets 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 and 2016 income tax returns.

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.

Find out about:

Simplified depreciation for small business where we read –

You can choose to use the simplified depreciation rules if you have a small business with an aggregated annual turnover (the total normal income of your business and that of any associated businesses) of less than $2 million.

Under these rules, you:

  • Immediately write-off – deduct their full cost in the year you buy them – most depreciating assets that cost less than $20,000* each that were bought and used, or installed ready for use from 7.30pm (AEST) on 12 May 2015 until 30 June 2017
  • Pool most other depreciating assets that cost $20,000 or more in a small business asset pool and claim
  1. A 15% deduction in the first year (regardless of when you purchased or acquired them during the year)
  2. A 30% deduction each year after the first year
  • Write-off the balance of your small business pool at the end of an income year if the balance – before applying any other depreciation deduction – is less than $20,000.

Need help? Not sure? Call for FREE 30min advice / strategy session today!

Call 0407 361 596 Aust and also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!

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Author: accountkeepingplus

Administration, bookkeeping and compliance for small business, and Self-Managed Super Funds (SMSF) Training, trouble-shooting, or we can do the books and payroll for you! Self Managed Superannuation Fund Service Provider, Free support MYOB Certified Consultant, Reckon/QuickBooks Professional Partner.

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