July is the month many of us like to roll out a bit of Benjamin Franklin.
Although unaware it’s the famous founding father of the United States we are quoting, it was indeed he who proclaimed nothing was certain in this world, ‘except death and taxes’.
And so it remains, 200 years later, one of this world’s great certainties.
Not so certain though, perhaps even a bit unclear, is how best to maximise the benefits of the $20,000 small business asset write off, now we have said goodbye to another financial year.
Following the announcement of the write off in the May Federal Budget, the ATO, internally at least (as discovered by the ABC through the Freedom of Information Act), expressed concerns about tax payers, and more specifically, fraudulent tax payers, trying to take advantage of the more complicated environment.
In a recent chat with one of our great bookkeeping partners, we discussed the increased urgency of her business clients wanting to get their end of financial year paperwork to the accountant a lot quicker this year. She was surprised by the number of clients desperately trying to get their tax done earlier than previous years.
This generally means one of two things – those clients are either well prepared this year (thanks to tax planning), or they are anticipating a tax refund. But for small business owners, what kind of tax refund are we talking?
Could small business owners be getting a bit excited about the $20,000 tax write off for all the wrong reasons? The use of some accounting lingo and clever advertising could easily have led to small business owners being unclear as to what the $20,000 write off actually means.
To put it simply, it is not a $20,000 reduction in tax or an offset the ATO is going to refund when tax returns are lodged. It is purely allowing small business owners to claim the full cost of the asset they have purchased in the financial year they bought it in, rather than over the time the asset would be used.
It’s also good to know…
- It isn’t limited to one item per financial year
- If you are registered for GST, any applicable GST is deducted first
- The write off is available until 30 June 2017.
Keep in mind there are many considerations and factors that go into this $20,000 immediate write off that small business owners need to be aware of.
Want to know more? Contact ustoday and make sure you get the write off right!
REMINDER: 24th October 2015, our Lead Navigator Nicole Bottrell will be teaming up with four other talented business women in a full day workshop. This one day event is designed to give you access to five subject experts providing advice and working on your biggest business challenges. Everything you need to get started or really get going in your business. For further details click here.