Australia’s 2015 Federal Budget was announced this May, and Small Business Minister Bruce Billson labelled this year’s budget as “…the most substantial small business package this country has seen.” One of the biggest announcements was a temporary increase to the immediate asset write off that will give eligible small businesses the ability to claim back business purchases of up to $20,000. But what does that mean for you and your business, and how do you know what’s eligible? We’ve outlined the key messages below.
What does it mean?
Small businesses with an aggregate annual turnover of under $2 million can claim immediate tax deductions for all asset purchases costing less than $20,000 you make until June 30th 2017, rather than having to depreciate those purchases over several years. Previously, the instant asset write-off threshold was $1,000.
Am I eligible, and what’s covered?
Your business must demonstrate ongoing activity through your Business Activity Statements. Any asset involved in running your business can be covered by the scheme. Business items under $20,000 can be claimed as a tax deduction. Federal Treasurer Joe Hockey commented that “…if you run a cafe, it might be new kitchen equipment, or new tables and chairs. If you’re a tradie, it might be new tools or a computer for the home office.”
What else does this year’s Federal Budget give to small businesses?
The Federal Government has also made some changes to taxes paid by small businesses. Companies with an annual turnover of less than $2 million will see a tax rate reduction from 30% to 28.5%. Sole traders, partnerships and trusts with an annual turnover of less than $2 million also get a 5% discount from July 1st 2015, for up to $1,000 per individual in an income year.
What does this mean for Australia’s small business community?
If you’re currently running or thinking about starting your own small business, now could be the time to act. Making an investment in business tools that will help you run more efficiently such as a new point-of-sale system, or investing in new digital tools, might be two things you may consider.
To fully understand the impact that this year’s Federal Budget has had on your business, schedule time to speak with your Accountant or Financial Advisor. You should also refer to the Australian Government’s Budget 2015 website for further information. Square does not accept responsibility for the accuracy of the information presented in this article.