NEW TAX DEDUCTIONS ARE A BOON FOR SMALL BUSINESS
TRADIES are hoping to use the Federal Government’s recently announced tax break to expand or upgrade their businesses.
Master Electricians Australia chief executive Malcolm Richards said the $20,000 instant write-off for business asset purchases would allow electrical contractors and other tradespeople to invest in the tools needed to keep their staff safe and working efficiently.
The 2015 Federal Budget proposed allowing small businesses with an annual turnover of less than $2 million to immediately deduct assets up to a total of $20,000.
This replaces the previous instant asset write-off threshold of $1000. The Federal Government has allocated $1.75billiontofundthescheme,which will run for the next two years. There are three important things to remember when claiming workrelated expenses: 1. You must have spent the money 2. It must be related to your job 3. You must have a record to prove it
For more information, visit ato.gov.au/deductions or phone 132 861
Arborist Steve Slaughter said the deduction could help him buy chainsaws, ropes and safety equipment.
“A good chainsaw costs between $1000 and $2000. limbing gear costs around $3000 for one guy,” he said.
The $20,000 limit applies to individual assets, meaning small businesses can apply the rule to as many different items as they wish.
The assets must have been bought, installed and ready for use between 7.30pm on May 12 this year and June 30, 2017.
The Australian Taxation Office (ATO) has provided an example of how this may apply to a small business: “For example, Pamela bought a second-hand skid steer loader for $17,000 on May 28, 2015, which is used solely in her landscaping business.
“As the asset cost less than $20,000, Pamela will be able to claim an immediate deduction for it.
“For assets costing more than $20,000, small businesses can elect to use the pooling arrangements and depreciate the cost of such assets at 15 per cent in the first year and 30 per cent each year thereafter.’’
Items that can’t be claimed under the rule include plants, capital works, petrol and operating expenses.
Assets that can be bought include tools of the trade such as welding equipment, chainsaws and generators.
Computers, tablets and phones used solely for work are applicable.
Vehicles are included if they fall under the $20,000 threshold — which does not include GST.
As this law change will be retrospective, the ATO says it is important small businesses understand obligations under the existing and proposed laws.
Importantly, under the announced new measure, small businesses will need to keep records of their purchases in order to verify their deduction.