Senate green-lights $20,000 small business tax write-off
SMALL businesses will now officially get access to a $20,000 tax write-off to purchase items relating to their business after legislation passed the Senate today.
The measure, which was the big ticket item in this year’s budget, passed without amendments and only a little debate shortly after 11am today.
A 1.5 per cent tax cut was also passed.
The bill was given top priority in the Senate and debate lasted for about an hour.
Small businesses rejoiced after Treasurer Joe Hockey announced the measure in the May budget.
The former write off threshold was just $1000.
Any small business or sole trader with an Australian Business Number is eligible for the tax deduction as long as their business has an annual turnover of less than $2 million. This includes freelance journalists and any person with an ABN.
Any item relating to the business is permissible, however it needs to be a physical item and things such as marketing costs are not valid.
The tax cut is valid from budget night through to June 30, 2017. However Tony Abbott left the door open to extending the cut in a post-budget interview.
Mr Abbott also left the door open to extending the $20,000 tax reductions beyond 2017.
“Let’s just wait and see what happens,” the Prime Minister told Sky News at the time.
Here’s a how you can get access to the $20,000 write off.
WHO CAN GET IT?
Any small business or sole trader with an Australian Business Number is eligible for the tax deduction as long as their business has an annual turnover of less than $2 million. This includes freelance journalists and any person with an ABN. Applying for an ABN is free and you can get the details here.
HOW DOES IT WORK?
Businesses or sole traders purchase the items outright and then get the money for the item back as a tax write-off.
WHAT CAN I PURCHASE?
Any item that relates to your business. This could include a plasma television, a new car, a fridge, a coffee machine, power tools or even a thermomix for a food writer. Items don’t have to be brand new and can also be second hand.
WHAT CAN’T I CLAIM?
Items to be claimed must be physical items. Marketing costs are not permitted. You also aren’t able to claim stock or software for your business.
CAN I ONLY CLAIM $20,000?
No, you can claim as many products under $20,000 as you desire. There is no limit.
ARE THERE ANY RULES AROUND MY CLAIM?
Yes, the items that you purchase must be related to your business.
IF I WANT TO BUY SOMETHING OVER $20,000 CAN I STILL CLAIM ANY DEDUCTIONS?
Yes. Any items over $20,000 can be added together (pooled) and depreciated at the same rate. These assets are depreciated at 15 per cent in the first income year and 30 per cent per year thereafter.
HOW LONG DO I HAVE TO CLAIM?
The $20,000 tax deduction began at 7.30pm on May 12, 2015 and goes through to June 30, 2017. It is scheduled to go back to the original $1000 threshold after that time.