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Making the most of the Instant Asset Write-Off for Small-Medium Business

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In exciting news for Australian small-medium businesses, this year’s budget included a boost to the instant asset write-off. The 2019/20 financial year sees the threshold increasing to $30,000.

As an added incentive the eligibility criteria has been extended to include businesses with an annual revenue of up to $50m (previously capped at $10m) which means that medium sized businesses can now join small businesses in benefiting from this scheme.

From April 2nd, 2019, until the June 30, 2020 cut-off every business that meets the criteria will be able to claim the write-off to as many individual items as they wish.

The ATO website explains with the following example:

Barry owns a plumbing business. On 10 April 2019, Barry purchases and starts to use a new van for his business valued at $22,000. The following month he purchases and starts to use a trailer to support his business which costs him $14,000. Barry has spent a total of $36,000. As the $30,000 instant asset write-off threshold applies to each asset, Barry is able to claim both the van and the trailer in his 2019 tax return.

The Government currently has no plans to extend the scheme past the June 30, 2020 cut-off, so make sure you take advantage of this scheme while you can.

Tax Tip #1 – Perform a Business Health Check

The end of the financial year is a great time to check in on the health of your business. 

By checking your systems and record keeping you can make sure that you’re in a good position to efficiently and accurately complete your return, even before you step foot in to your accountant’s office. 

There are a number of informative tools available to help you, including the ATO’s Business Viability Assessment Tool .

Tax Tip #2 – Record Keeping

Remaining mindful of your finances all year round is ideal, but the reality is we all get busy and keeping immaculate records is time consuming. 

Now is a great time to switch to electronic record keeping, if you haven’t already. If you’re a bit old school and still like to keep paper records – make sure you are super organised. 

There are many great products available to help keep your records protected and organised, from folders to files and specialised cabinets. Consider how much paperwork you have on hand, how much you’re likely to accrue during the next financial year and choose the most appropriate system for your needs. An organised office can make everything run more smoothly, not just tax time! 

Tax Tip #3 – Be Deduction Savvy

Every year, changes are made to the items you can and cannot deduct and staying on top of these changes is the key to healthy tax savings. 

Every year, changes are made to the items you can and cannot deduct and staying on top of these changes is the key to healthy tax savings.

Other than some interesting news for personal income tax cuts, the most significant announcement to come out of the recent budget is the increase to the instant asset write-off threshold from $25,000 to $30,000 until 30th June 2020, and that it has been expanded to include businesses with a revenue of up to $50m, opening it up for the first time to medium sized business.

Tax Tip #4 – Make Smart Purchases

Now is not the time to start flippantly spending your cash just for the deductions, but it is a great time to think about your business and its needs, and consider what purchases will be an asset. 

What will increase productivity? Or reduce costs in the long run? 

If your technology is getting a little old, take this opportunity to make some upgrades. There are great EOFY deals available and huge savings to be had, so now is the time to jump on it. 

With a few smart moves and a little preparation, tax time doesn’t have to be a headache, and you may find you can actually save some money and improve the day to day running costs of your business.

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