$20,000 asset write-off – Part 2

One of the best tax planning options available to small businesses is the ability to claim a full tax deduction for the cost of any business asset costing less than $20,000. In $20,000 asset write-off Part 2 we explore 6 other important considerations and traps to take into account before committing a significant part of your cash reserves:-

  1. If you trade-in an asset, it is the cost of the new asset that qualifies. So if your business buys a car for $30,000 and trades in an old car for $12,000, there is no entitlement as the cost of the new asset exceeds $20,000.
  2. The $20,000 refers to the GST exclusive price. If however, a business is not registered for GST, it is the cost of the asset including GST.
  3. You can only claim the business portion on an asset that is used for both business and privately – such as a car or lap-top.
  4. As tempting as this limit is, don’t get too carried away and buy assets that your cash flow cannot support.
  5. If your business has current or carried forward losses in excess of your intended asset purchase(s), then your business will not gain any tax saving in this financial year.
  6. This accelerated write-off rate applies will remain in place until 30th June 2017 so next year is the last time you can utilise this generous arrangement.

If you haven’t done so already, please refer to last week’s post where we outlined 6 other important considerations. Moreover, please contact us if you have any questions in relation to this or any other pre year end tax planning issue.

At MRS, we will spend today planning for your success tomorrow.

 

At MRS, we will spend today planning for your success.