Are you looking to purchase assets for your business? Eligible businesses can spend up to $20k per asset and immediately claim the tax deduction and GST. Talk to us about the best strategy for purchasing business assets.
If your business is eligible, it may benefit you to claim an immediate deduction for business assets bought and used this financial year. This means you claim the entire expense of the asset rather than depreciating it and apportioning the cost over a number of years.
In the May 2023 budget for the 2024 financial year, the proposed instant asset write-off threshold was announced as $20,000. While the measure is not yet law, we don’t anticipate any problems with this law passing.
The $20,000 threshold applies to each asset so you could claim a tax deduction for multiple assets in the same financial year.
Can You Claim the Instant Asset Write Off?
If your business has an aggregated turnover of less than $10 million, you can claim the total cost of eligible assets. Assets must be installed and ready for use between 1 July 2023 and 30 June 2024. The payment for the asset may be in a different tax year.
Whether you are on a cash or accrual basis for your BAS will govern which period you claim applicable GST within.
Some businesses and types of assets can’t be claimed immediately – talk to us if you’ve got lease arrangements for assets you’ve bought, horticultural plants such as grapevines, research and development assets, or you’re in the building and construction industry. Some types of software and improvements to assets are also excluded. Assets costing more than $20,000 are treated differently.
And remember – you can only claim a business deduction for business use of assets – if you use an asset for both personal and business, you’ll need to apportion the percentage of usage between the two.
Keep your Records!
Remember to keep all your business records for at least five years, including all asset purchase and installation documents.
Purchasing assets is a great way to leverage funds and expand your business – however, the timing of the purchase is critical. When considering the purchase of an asset, it is important to consider whether you have existing funds that can cover the cost or if you need to source finance from a loan or other source. This is especially important for cash flow management as it can help to spread out costs over time.
The team at TSP Accountants are experts at helping businesses plan their asset purchases in order to get it right. We’ll take into account the current market movements, economic trends and cash flow needs when advising on suitable strategies for purchasing assets. Our aim is always to ensure that our clients make decisions that will enable them to build long term success and prosperity for their business.
Talk to us about purchasing assets for your business – should you purchase now or later? With existing funds or through a loan? We’ll help you plan the best strategy to look after your cash flow. Contact us today for a chat about your business eligibility 49 264155 or firstname.lastname@example.org.