Are you eligible for the government's $20,000 small business tax deduction? If so, what kind of gear are you actually allowed to claim? This Etax infographic breaks down whether or not your business purchases will make the cut.
The Federal Government's small business tax break announced in the last Budget allows small businesses to immediately deduct the cost of any individual asset purchased up to the value of $20,000. However, there are a range of restrictions and stipulations in place ranging from annual turnover to how the purchase was made.
The below infographic outlines which businesses are eligible along with the type of purchases that will be accepted. Basically, if any of the below questions steer you towards the right side of the infographic, you're out of luck.
If you are eligible, it's worth noting that the $20k tax break doesn't mean you'll be refunded on a dollar-for-dollar basis. As the infographic creators warn, you're likely to end up with less than half the total purchase price.
"Sole traders and small businesses get lulled into a false sense of security by thinking that any work-related purchases will be refunded in full through their tax return," Etax's Simone Davis explains. "Now that the limit for instant tax deductions has increased to $20,000, small businesses -- which make up 97 percent of all businesses in Australia -- run the real risk of becoming over-extended."
As a general rule of thumb, you should stick to EOFY purchases that you were planning to make anyway rather than splurging because of the tax break. Before making a $20k purchase, you should naturally consult with your accountant and assess how the item will boost your bottom line.
You can find plenty of additional small business tax advice via our 2015 Tax Week guide.