Instant Asset Write Off to be Abolished
The new Federal Government's plan to remove the Mineral Resource Rent Tax (The MRRT), also involves removing some tax benefits that are currently available to small businesses. Whilst the Federal Government had made this known in their commentary in the past, it is now Draft Legislation.
In relation to Small Business (turnover of less than $2 million), the main two tax benefits being removed are the reduction in the "Instant Write off threshold" and the "Accelerated Depreciation for motor vehicles".
- Instant Write off threshold
This allowed small businesses to obtain an instant write off for assets which cost less than $6,500 (GST exclusive). This will revert to the old threshold of $1,000 (GST exclusive).
- Accelerated depreciation for Motor Vehicles
This allowed for an instant tax write off of the first $5,000 of any motor vehicle purchased.
The changes will be effective from 1 January 2014 and therefore there is only a small window of opportunity to still take advantage of these benefits.
Therefore you have approximately 7 weeks to arrange for the purchase of assets to obtain the accelerated tax benefits. Keep in mind the asset must be acquired and being used in your business prior to this date. You can't order now and have delivered after 1 January 2014.
If you purchase an asset over $1,000 after 1 January 2014 you will still be able to claim it as a deduction by depreciating it over a number of years.
You should review your budget and your needs to determine whether it is beneficial from a cost benefit point of view to purchase assets now to take advantage of the accelerated deductions.
Please do not hesitate to contact us should you need assistance in determining the benefits you will be entitled to and whether, from a cost benefit analysis, it is worthwhile to proceed now rather than at a later date.