Small Business Concessions

Posted on Jun 28, 2012 | 0 comments

From 1 July 2012, the small business immediate asset write-off threshold increases from $1,000 to $6,500.  This means you can claim a tax deduction in full in the year that you purchased the asset for up to $6,500.

In addition, if you are buying a motor vehicle costing $6,500 or more after 1 July 2012, you can claim an initial deduction of $5,000 immediately, and the remainder if the motor vehicle value is depreciated over eight years in general, or pooled in the general small business pool (depreciated at 15% in the first year then 30%).

For example, if you purchase a car on 5 July 2012 for $30,000 (GST excl.), you can claim a tax deduction of $5,000 plus the first year depreciation on the car roughly $6,250 (or $3,750 if using a pool), totalling $11,250 in your 2013 tax return.  Comparing this to the old rule (if you buy the car before 1 July 2012), you can only claim a deduction of roughly $6,250 (or $3,750 if using a pool) in the year of purchase.  If you are considering a car purchase you may want to consider delaying until after 1 July 2012 to take advantage of this new concession.

Other changes effective from 1 July 2012 include the long-life small business pool and the general small business pool which  are to be consolidated into a single pool to be written off at one rate.

Please note these amendments only apply to small businesses that have an aggregated turnover of less than $2 million.  Aggregated turnover includes the annual turnover of the small business and then annual turnovers of any connected or affiliated businesses.  Please contact JWA Business and Wealth for further information.

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