03 Apr 2019
One of the major complexities of running a small to medium sized business (SME) is staying across constant legislative change and understanding how it will impact your business.
A key announcement for SMEs in the recent Federal Budget was the instant asset write off being extended to medium sized businesses (annual turnover of up to $A50 million) and an increase in the asset write off threshold from $A25,000 to $A30,000 on a per annum basis.
" An important element of running a small business is having the right equipment.”
These changes are until 30 June, 2020.
The increased turnover threshold limit means taking advantage of the write-off is now available to more businesses such as Andrew Walter Constructions.
Business Manager Denis Miller says the change in legislation will definitely help the company. “We spoke to our Asset Finance Specialist at ANZ who explained the changes and worked with us to organise asset financing for four new utes at just under the $A30,000 threshold each.”
Miller says using asset financing also meant there was no impact on working capital so they didn’t have to worry about cash flow when utilising the write-offs. “We’ll save money by upgrading our fleet to more fuel efficient cars which also have better safety features.”
The company also plans to use the tax write-off to buy other Plant and Equipment items that will improve traffic management and staff safety while working on public roads.
These changes will provide further assistance to SME operators in managing their cash flow. Freeing up cash to drive business growth, recruiting more staff or upgrading equipment are all critical to running a business. The difference a new van, fridge, or an industrial oven can make to day-to-day operations is not just a benefit at tax time.
But the further advantage of claiming the instant asset write-off is that eligible business owners will get a one-off cash injection upfront in the year of purchase (However it is important to understand the 'instant asset write-off' claim must be made in the year in which the asset is purchased.)
Moreover, if a business owner buys an asset that will be used part of the time for personal reasons; the owner can only claim the write-off for the portion of the asset used in the business.
For example, if a vehicle is used 75 per cent for business and 25 per cent for personally, the instant write-off can only be claimed for 75 per cent of the purchase price.
We’ve broken down the key features of the legislation in the infographic below.
Guy Mendelson is Portfolio Lead for Business Owners at ANZ
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
03 Apr 2019
31 Aug 2018