The measure provides an immediate tax deduction for small businesses (annual turnover less than $2 million), who purchase and use or install ready for use, assets costing less than $20,000 (the previous threshold was $1,000 or $6,500 depending on the purchase date and the threshold will revert to $1,000 from 1st July, 2017).
The threshold applies on a per asset basis, meaning that several individual assets with a purchase cost of less than $20,000 may be eligible for the immediate deduction – this is great news if you have a few large items needing replacement.
This measure has the potential to save many small businesses a significant amount of income tax which in turn provides a great benefit to cash flow – but the real cash flow benefits will depend on your personal circumstances.
The types of assets which may be purchased and written off include cars, delivery vans, kitchens, machinery and tools…essentially most capital items that would otherwise have to be depreciated over a number of years!
If you are unsure if you are eligible for this accelerated depreciation, or if you’d like to quantify the impact, please discuss with your accountant!