Immediate Write Off up to $150,000 For Individual Small Business Assets

The new Government temporary tax incentive announced as part of the Federal Budget 2020, has set up  tax write-offs on all assets up to $150,000 for all small, medium and large companies in Australia. 

So, if you have a business, no matter its size, this is probably the right time to renew or upgrade your machinery, plant, tools or get that missing asset that can take your business to the next level.

The Government's economic response of almost $27 billion, was developed to boost cash flow to support Australian houses and businesses through this extremely tough period because of the Coronavirus pandemic.

The $150,000 threshold per asset is a considerable increase from the previous amount of $30,000 and will run up until June 30, 2022.

What does this tax write-off means for my business?

Companies in need of new autos, utes, trucks, machinery, computer systems, phones or any other company essentials are obtaining an additional tax break.

This permits businesses to claim an immediate deduction of the amount of all new, eligible, depreciable assets of any worth. For small to medium-sized companies, pre-owned assets will be covered too.

Organisations that hold assets that qualify for the $150,000 instant asset write-off will have an additional six months, until June 30, 2021, to  set up those assets.

Small companies, with yearly turn over below $10 million, will be allowed to subtract the balance of their depreciation pool at the end of the income year under full expensing arrangements.

Regulations that prevent local businesses from re-entering the devaluation regimen for five years after they opt-out, will be put on hold.

Additionally, the Government will enable firms with turn over up to $5 billion to offset losses versus previous earnings on which tax has been paid, to make a reimbursement. Losses incurred up to 2021-22 can be returned against profits made in or after 2018-19.

Moreover, companies will no longer have to pay additional benefit tax if they pay to re-train or re-skill workers that are transferred to a different role in the business.

Does the tax write-off apply to my business?

The tax cuts will be offered to organisations with an annual turnover of under $5 billion, which is equivalent to about 3.5 million organisations, that employ 11.5 million people, equivalent to around 99 per cent of Australian business.

The plan is expected to boost investment, expand the productive capacity of the country and produce thousands of new jobs. "Every sector of our economy, every corner of our country, will profit. This is just how we will get Australians back to work." Treasurer Josh Frydenberg claimed.

To check the official 2020 Australian Budget overview click here 

How your business can leverage the tax incentive beyond the write-off? 

As businesses will be able to claim an immediate reduction of the full value of new assets, the write-off is expected to unlock investment, allowing small business to buy, sell, deliver, install, and service these purchases.

If your business is in the asset sales world, this is the right moment to push your sales. One effective way of closing more deals is to offer your customers financing solutions that break down large purchases into affordable weekly or monthly payments, making the goods more accessible and allowing a bigger audience to buy, thus increasing sales.

The bottom line 

Is your business offering finance? There is not a better moment to start! Not sure how to offer finance? We are here to help with our turnkey consumer financing platform for brokerages and dealerships.