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Immediate deductions for small business

New laws have passed that allow small businesses to claim an immediate deduction for assets they start to use – or have installed ready for use – provided each item costs less than $20,000. This will temporarily replace the previous instant asset write-off threshold of $1,000.

If you maintain a general small business pool, this can be immediately written-off if the balance is less than $20,000.

Assets that cost $20,000 or more (which can’t be immediately deducted under other provisions) are deducted over time using the general small business pool. Under the pooling mechanism a deduction for 15 per cent of the cost is allowed in the first income year with a diminishing value rate of 30 per cent deduction on the opening pool balance allowed for each income year thereafter.

This measure starts 7.30pm (AEST) 12 May 2015 and will end on 30 June 2017.

Come and talk to us on how to tax effectively purchase and make investments in your small business.