One thing that has helped businesses from being swallowed in the last few fiscal years is the $30K instant asset write off. The government has extended its implementation and increased the threshold.
Given that the Department of Jobs and Small Business found businesses held an economic value of $393 billion in the 2016-17 fiscal year—that’s just over one third of the economic output of the entire private sector in Australia—ensuring small business survival is a key economic policy. Without that large slice of the pie in the Australian economy, one can only hypothesise the impact.
For businesses, the relief tax deductions like the $30,000 asset write-off offer is a saving grace.
But do not be too hasty to spend money, warn the experts.
Clayton Cooke, Chief Commercial Officer for NewsCorp, said to wait, and not to be too frivolous with your spending.
“A lot of businesses just want to spend money on things they don’t really need,” he said.
Cooke explained further, giving an example of a tradesman who has a dodgy ute, which keeps breaking down, and therefore he can’t get to work. He could buy a new car, if he finds one under the newly increased $30k threshold, and write it off - since he needs it for work.
The tax break is a benefit that is designed to help business perform better while receiving some monetary value of the asset in return. Hence, businesses are encouraged to invest only in the assets they need to help their business.
Some examples of assets that can be purchased, and written-off, are as follows:
- Tradesman: Electrical Tools; Storage equipment (eg lockable tool boxes for the back of utes)
- Café Owner: Shop furnishings (eg Table and chairs); shop equipment (coffee machines, cooking equipment; dishwasher; new Point of Sale systems)
- Real Estate Agents: Digital tools of trade (eg laptop, smart phone, printer)
The idea of this positive tax break is to stimulate the productivity of SMEs, helping increase sales, allowing the employment of more staff and helping the bottom line - meaning their more likely to survive and succeed. Propping up small businesses, as explained earlier, is key to helping overall that large private sector, and continue economic growth.
So far, the success stories speak for themselves.
The Sydney Morning Herald shared the story of an Australian t-shirt screen printing company that bought a digital t-shirt printer using the asset write-off. The new purchase enabled them to increase sales from 100 to 2000 orders a day and employ more staff as the demand increased.
The future of the scheme looks good too, and it may well become permanent.
The Australian Chamber of Commerce and Industry welcomed the recent asset value increase to $25,000. The incentive has now been proposed to be extended, and covers up to $30K, for the very reason that it encourages businesses to hire, increase productivity, and fosters economic growth - which is really good for the overall Australian economy.
Places to get further information about the $30,000 tax deduction include:
For further discussion with a finance expert, contact the team at Morris Finance on (03) 5223 3453