In The Media
Moreland Leader Newspaper
Monday July 20, 2015
DEDUCTION HELPS THE LITTLE GUYS
USE TAX BREAKS FOR BUSINESS
THE start of the financial year is a good time to take stock of your budget and put plans in place to make the most of your investment.Don’t overlook the new rule that is a plus for small business.
If you are a small business, don’t overlook the benefit of an immediate tax deduction for any assets you buy that cost less than $20,000.
This $20,000 threshold kicked in on May 12 this year, and will be applicable for items bought and installed, ready for use until June 30, 2017. With a previous threshold of $1000, the proposed limit applies to individual items, meaning small businesses – ones with an annual turnover of less than $2 million – can apply this rule to as many different assets as they wish.
Business Ignition Group director Paul Dobson said the budget announcement meant bringing forward tax savings that would otherwise have been spread over several years. “Simply put, if a small business makes a profit of $50,000, the tax payable at the new company tax rate would be $14,250,” he said. “The deduction of business related assets up to $20,000 would reduce the taxable profit to $30,000 with a tax payable amount of $8550; a tax saving of $5700.
“For a non-incorporated small business the tax saving will be dependent on the individual’s marginal tax rate.”
Assets that qualified for the tax deduction under the new scheme included vehicles such as cars, utes, vans or trailers; office equipment such as computers, printers, photocopiers, coffee machines, even airconditioning units, fridges, solar panels and tools.
But Mr Dobson said investments should not purely be tax driven. “It must be a decision that will assist them in growing their business or creating business growth opportunity,” he said.