Understanding the $20k Small Business Tax Break

Jean-Paul MollingerNews & Events

A Look At The Instant Asset Write Off & Accelerated Depreciation Incentives For Small Business


– With EOFY fast approaching, it’s a great chance to look at the $20,000 Instant Asset Write Off & Accelerated Depreciation Incentives currently on offer for small business in Australia. These are two separate tax benefits, with the former applying on new and used equipment assets that cost less than $22,000 inc. GST ($20,000 ex. GST), and the latter applying for assets valued $22,000 inc. GST ($20,000 ex. GST) or more.

We’ll cover the basics in this article, but for a thorough look you can visit the ATO website. Start here for information on the current offer (referred to as the ‘Immediate Deductibility Threshold), have a look here for details on the Instant Asset Write Off, and visit this page for a look at Accelerated Depreciation.

Small businesses can claim an immediate deduction for new and used equipment they purchase, where the cost is less than $22,000 inc. GST ($20,000 ex. GST). This depreciation deduction is limited to the percentage your asset is used for business. This instant asset write off applies to all kinds of assets, and would include mowers, tractors, slashers and implements. It can even be used on trade-ins, so long as the purchase price of the asset is under the $20,000 ex. GST threshold. If you have a tax bill that you’d like to reduce, then you can get genuine savings on equipment using this incentive.

Also note that the instant asset write off can be used as many times as you like, so long as each piece of equipment is under the $20,000 ex. GST threshold.

Equipment purchased that’s $22,000 inc. GST ($20,000 ex. GST) or over can be placed in the small business simplified depreciation pool, and depreciated at 15% in the first year and 30% in subsequent years. Business can use simplified depreciation if their aggregated turnover is less than $10 million – this is a change from previous income years (prior to 1st July 2016), when the turnover level was $2 million.

At the time of publishing this article, this incentive ends soon, on the 30th of June 2018. That doesn’t leave a lot of time to take advantage of this great incentive. There is a chance the Government may extend the tax break for another year – in which case, we’ll update this article to reflect that.

Finally, depending on your business, there may be benefits to using an alternate depreciation structure, and some exclusions do apply to the immediate deductibility threshold and the simplified depreciation pool. As always, we’d recommend seeking professional advice to understand any tax benefits that would apply to your own circumstances. You should not act, or refrain from acting, upon the general information presented here without obtaining specific professional advice.

Hopefully this article has shed a little more light on the offer, and how it can apply to you. If you’d like to talk to KC Equipment about securing equipment under the $20k Instant Asset Write Off threshold, then please visit our contact us page for details on your local branch, or enquire online.

KC Equipment services the Agricultural, Golf, Sports, Commercial and Residential grounds care industries with a huge range of equipment from the world’s leading manufacturers, including Massey Ferguson, Iseki, Kubota, and Jacobson. With over thirty years of experience, branches in Yatala, Lismore and Murwillumbah, and a huge parts and supplier network, KC Equipment can assist you with all aspects of your operation.

KC Equipment – for everything in your shed.

For any media enquiries, contact Jean-Paul Mollinger, Marketing Coordinator, on marketing@farm-equipment.com.au