Home – New Forums Starting your journey Budget’s new tax breaks for small businesses

  • This topic is empty.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • #991758
    Jordan Harman
    Member
    • Total posts: 17
    Up
    0
    ::

    Hi,
    Was hoping someone could explain to me how the tax break brought in in the new budget can help small businesses. I have my own contemporary glass products and glazing business, however until recently I have also been employed full time elsewhere. I’m thinking, now may be a good time to fully go out on my own but I need to invest in certain equipment such as a ute, glass rack, tools etc. am I best off buying these now before June 30th, and how exactly does the tax break work? Do you minus the cost of the purchase off your total income for the year?
    Any advice would be gratefully received.
    Cheers.

    #1183190
    Robert Gerrish
    Member
    • Total posts: 1,274
    Up
    0
    ::

    Hi Jordan

    I think you’ll find this thread from one of our super-helpful members goes a long way to clarifying your question.

    Robert

    #1183191
    The Profit People
    Member
    • Total posts: 76
    Up
    0
    ::

    Hi Jordan,

    This is an extract from the Govenment website

    ACCELERATED DEPRECIATION

    All small businesses will get an immediate tax deduction for any individual assets they buy costing less than $20,000. (Currently, the threshold sits at $1,000).

    This $20,000 limit applies to each individual item. Small businesses can apply this $20,000 rule to as many individual items as they wish. These arrangements start from Budget night and continue until the end of June 2017.

    So what this means is that say you have sales turnover (assessable income) of $100,000 you are allowed to offset this against Allowable deductions. Typically any assets bought in a business need to be written off over its useful life. So say you buy a Computer for $2,000 has a useful life of 4 years then based on a a straight line method of depreciation you can claim $500 ($2,000 / 4 years) per year. What this incentive is saying that you can claim the full $2,000 in the year of purchase plius other capital assets up to a total of $20,000.

    So just to be doubly clear you won’t get your $2,000 you spend back. You will only get back as much as your marginal tax rate. So if you earn $30,000 for example you would be at the 30% marginal tax rate. So for the $2,000 you spend you get back in your pocket (or not have to pay tax) of $600 ($2,000 x 30%).

    Hope this all makes sense.

    Cheers
    Michael

    #1183192
    bb1
    Participant
    • Total posts: 4,485
    Up
    0
    ::
    tickgether, post: 214566, member: 67432 wrote:
    Hi Jordan,

    What this incentive is saying that you can claim the full $2,000 in the year of purchase plius other capital assets up to a total of $20,000.

    Hi Michael, Can you just clarify the comment above, the way it is written, it sounds like I can only claim up to a total of $20K . Where as all the other advise is you can claim multiple items, as long as each item is under $20K.

    #1183193
    The Profit People
    Member
    • Total posts: 76
    Up
    0
    ::

    Hi Bb1,

    Yes, you are right in saying that the the limit is $20K per item.

    #1183194
    Kelly Exeter FS Editor
    Member
    • Total posts: 241
    Up
    0
    ::

    Hey everyone – just letting you know that Campbell King has written an article for us on the 2015 Budget :) http://www.flyingsolo.com.au/finance/financial-management/2015-federal-budget

Viewing 6 posts - 1 through 6 (of 6 total)
  • You must be logged in to reply to this topic.