Everything You Need To Know About The $20k Small Business Tax Break [Infographic]

Everything You Need To Know About The $20k Small Business Tax Break [Infographic]

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.

[Via Etax.com.au]


  • This chart does not match the information on the ATO website…

    An eligible small business from 7.30pm (AEST) 12 May 2015 can claim an immediate deduction for any software purchased off the shelf, costing less than $20,000 that is used exclusively in the business.

    An eligible small business can also claim an immediate deduction for the cost of developing software for use exclusively in its business where the cost is less than $20,000. An exception applies if the entity has previously chosen to claim deductions for in-house software under the software development pool rules. In these cases the costs need to continue to be allocated to a software development pool.

    • How does it not match the ATO information? It specifically mentions the first part you have listed, and the second part you have listed is outside the scope here as it refers to entities that have previously chosen to claim deductions under software development pool rules (ie, they’ve already started claiming deductions for it prior to this financial year).

      Or am I missing something?

      • The sneaky bastards changed it. The first picture shows the original wording.

        Maybe they should put a note at the bottom saying it was changed.

  • I am going into real estate as a rep. I have already started training and have an abn. Although I am training with a real estate agency, no contract of employment has been signed yet until I pass my registration. Can I still claim the $20000 if I purchase a car now before I have signed a contract? Thank you

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