Over the past couple of years the government has taken steps to assist small business and to stimulate the economy. One of the mechanisms they put in place was an acceleration of depreciation for assets held by small businesses to provide tax savings and therefore cash savings.
Since May 2015, small businesses have been allowed to claim an immediate tax deduction on plant and equipment purchased for $20,000 or less. This was a significant increase from the prior threshold of $1,000, where all assets purchased for $1,000 or more needed to be depreciated over the life of the asset.
The $20,000 tax threshold meant up front tax savings and up front cash savings for small business, providing incentive for businesses to go out and be active in the Australian economy.
As of 1 July 2017 this threshold of $20,000 gets reverted back to $1,000. This change in government policy is a significant one for small business and provides significant tax saving opportunities that will be taken away after 30 June 2017. If your business needs new equipment and has been making plans on how to purchase that equipment over the next 6 to 12 months, get in contact with our friendly staff at Rubiix to explore this tax planning tool as well as the many other tax planning strategies available to small businesses.