June2015_EOFY, Christmas in June
End of financial year time feels a lot like Christmas except the gift you are buying is for yourself. Much anxiety is created at this time of year by a barrage of car and office stationery ads making you feel like the Christmas Grinch if you don’t fork out some cash.
The recent Federal Government Budget announcement of $20,000 up-front write off for small business asset purchases (was $1,000) will be a temptation for many. My number one rule when advising clients who are considering making a purchase is – never make a decision to buy (or sell) based on just saving tax. Purchases made should always be for something that is ordinarily required or that will improve the efficiency or the return/s for your business.
The new up-front $20,000 write-off eligibility rules are as follows:
Only businesses with an annual turnover of less than $2million are eligible.
Items purchased need to be less than $20,000, can be new or used and you can claim as many products under $20,000 as you like.
Purchases can be made from 7.30pm on 12 May 2015 until 30 June 2017.
There are some exceptions including construction costs, software developed in house and horticultural plants.
Some other budget measures are:
In addition to the instant asset write-off, companies with annual turnover of less than $2 million from the 1 July 2015 will have their tax rate lowered, from 30 per cent to 28.5 per cent. Unincorporated businesses, such as sole traders, partnerships and trusts, will also get a 5 per cent tax discount from July 1 up to $1,000 a year.
Professional expenses associated with starting a new business such as costs of incorporating a company and legal and accounting advice will be immediately deductible from 1 July 2015 (rather than over 5 years currently).
Small businesses that wish to change their structure will be able to do so from 1 July 2016 without incurring a Capital Gains Tax (CGT) liability.
Above all currently I see the biggest single efficiency and growth gains for small business being made in the use of technology. With the NBN set to be supplied to Dayboro in the next 18 months now might be a good time to invest in new systems for your business.
As always you are best to advise your accountant before you make any major business or investment decisions.
By Scott Price of Holland Price Accountants Dayboro.
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