Small Business Instant Asset Write-off Increased!

Are you considering purchasing a new ultrasound machine?

 

On the 29th January, Prime Minister Scott Morrison announced that the instant asset write-off will be increased from $20,000 to $25,000. On 13thFebruary 2019, the federal government’s plan was introduced into parliament.

 

What is the “Instant Asset Write-off”?

The instant asset write-off allows small businesses to claim immediate deductions of up to $25,000. This can be for new or second-hand equipment asset purchases – such as ultrasound machines! The assets must first be used, or be installed for use, in the income year you’re claiming for. There is no limit on how many assets you can claim each year.

The initiative has been around since 2015 and is going to be extended through to 30 June 2020.

Who does it apply to ?

The write-off will be available for small business with an annual turnover of less than $10 million. More small businesses have been able to claim asset write-offs since the “small business” umbrella was expanded from $2 million to $10 million in 2017.

What Assets Qualify?

The purchased asset can be new or second-hand. The total cost must be less than the threshold amount (i.e. now <$25,000) – irrespective of any trade-in amount received.

Note that if claimed assets are later disposed of, you will have to include the proceeds in assessable income that year. You must also subtract any private use portion when working out the amount that can be claimed.

Why is the government increasing the threshold?

The government has introducted this incentive to improve cash flow by bringing forward tax deductions. This will give small businesses a boost and encourage them to reinvest in their operations and replace/ upgrade their assets. If small businesses invest money to make them more productive, that will have a direct, positive impact on the economy.

What Does This Mean for Veterinary Practices?

If you are thinking of investing in new equipment or upgrading old equipment, there couldn’t be a better time to take advantage of this great opportunity. Compared to other imaging modalities, ultrasound is relatively affordable and many of BCF Ultrasound’s options fall below the threshold. Contact us to discuss various options for your clinic today.

Before making any purchases,we advise you to speak to your accountant/financial advisor to discuss how the purchase might impact your cash flow or current tax position.

 

Learn More On This Topic From Kochie:

 

Links/Recommended Reading:

Australian Taxation Office: Simpler Depreciation for Small Business

The Guardian: Scott Morrison offers small business tax relief as he touts economic credentials

13th February – 9news: Small Business Tax Breaks Reach Parliament

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