How Can the Federal Budget Changes Help My Business?


From 7:30pm on 13 May until 31 June 2017, small businesses with aggregated annual turnover of less than $2 million per year will be able to write off assets (up to $20,000) immediately.

The previous threshold was $1000.

The new system will reduce your profit so you pay less tax. But while this sounds good, you have plenty of time to make purchases and you still should only buy assets that your business needs and has budgeted for.

How it works

You can purchase almost anything you need to run your business - such as ovens for bakers, tools for tradies, equipment for hairdressers, computers, printers, office furniture, coffee machines, kitchen equipment and cars. You can use the tax write-off on as many individual items as you want.

You can't buy stock for your business, office software, plants or claim marketing costs.

Any items over $20,000 can be pooled together and depreciated at the same rate — 15 per cent in the first income year, and 30 per cent per year after that. If the value of the pool drops below $20,000, it can be immediately deducted.

In conjunction with this, if the depreciated value of your existing assets in a "general pool" total less than $20,000, the entire balance can be deducted immediately.

What you can gain - an example of "Barry the Butcher"

Barry runs a butcher store. Last financial year he bought a piece of equipment worth $5,000. This asset is on the Balance Sheet being depreciated at 30%. A deduction of $1,500 for this financial year.

If after budget night Barry buys a similar piece of equipment for $5,000, he would receive a deduction for the full $5,000.

Certainly a more attractive proposition for a small business when allocating cash resources.

How you claim

No additional paperwork or election forms to complete, the accelerated depreciation is claimed through your tax return in the normal way.

Word to the wise

But if you don't need the item, don't buy it. There are harder ways your cash can work for you.

Also, the legislation has not yet been passed. Although the final legislation will be backdated to 12 May 2015, there may be changes made as it passes through parliament.

More information

For more information on maximising your cash flow and building a strong, saleable business, contact Ian Walker, Managing Director of Archer Gowland on 07 3002 2699.

You may also find the following FREE PDF white paper of interest written by Ian Walker "Building a Saleable SME". You are welcome to download this paper or forward it to a colleague.

Tips for Selling Your Business in Brisbane

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Ian Walker

Written by Ian Walker

As Executive Chairman, Ian is a trusted Professional Services practitioner with over 25 years’ experience within the Accounting industry. Working closely with his clients to form long-term partnership, Ian provides high-level strategic advice across all areas of Accounting, Business Advisory, Superannuation, and Taxation. Ian is proud to partner with many SME & Family-owned businesses to provide comprehensive and bespoke strategies to help address the challenges and complexities they encounter through day-to-day operations & management.