Tax breaks are few and far between, and the $20,000 instant asset write-off scheme is one to take advantage of.
But more than 60% of businesses aren’t fully utilising it, usually due to a lack of funds available. There’s a lot of confusing information about how the scheme works, and what this means for your cash flow. Here’s a transparent, free guide on how the scheme can benefit your business.
The instant asset write-off scheme is a great opportunity for businesses to purchase work-related equipment and write it off in one go. It allows you to invest in business assets valued up to $20,000 and decrease your taxable income by that same amount. If a lack of capital is stopping you from taking advantage of this opportunity, a short-term business loan can help.
So how exactly does the Asset Write-Off work?
The $20,000 instant asset write-off can be a huge boost for your business. By using this tax incentive, you can write off the depreciation on work-related asset purchases ‘instantly’ instead of claiming smaller depreciation each year. This means you can spend up to $20,000 on as many assets as you like decrease your taxable income, which means tax payable overall will be lower. You can claim this on tools, equipment, office furniture, air conditioners, work vehicles, IT hardware, signage and more.
Are you eligible?
If your business turns over less than $10 million a year, you can claim the $20,000 instant asset write-off on any business assets valued less than $20,000. This is how the instant asset write-off works: if you purchase a second-hand car for $18,000 and you use it 50% of the time for business purposes, you can claim $9,000, which will come off your taxable income. If you purchase two eligible assets worth $19,000 each, you can claim both of them too.
How can you take advantage without impacting your cash flow?
By purchasing business assets up to $20,000, you are decreasing your taxable income by that same amount. So instead of that money being tied up in assets for years waiting to be claimed as depreciation, you can claim depreciation ‘instantly’ in a one-off claim. This will return your investment into your business’ cash flow by decreasing your table income and tax payable.
What assets are eligible?
Assets eligible for the $20k instant asset write-off scheme include:
- Work vehicles
- Trade tools and machinery
- IT hardware (desktop computers, printers, photocopiers)
- Office furniture and fittings
- Equipment storage
- Kitchen equipment
- Air conditioners
So, what next?
You need to claim the instant asset write-off the same year you purchase the assets or install them for use in your business. So, if you want to take advantage of the scheme this year, you need to purchase the assets and submit your claim before June 30. If you need help with working capital before then, allow some extra time to apply for a loan.
If you need some help with capital raising to make the most of this tax incentive, Morris Finance offer a range of commercial products to provide cash flow for your business. Our team of dedicated finance brokers and new business specialists can provide you with information and access to financial solutions that will allow you to grow your business.
Contact Morris Finance today to unlock your business potential. We will give you the tools your business needs to get ahead.