Tax break for small firms

THE latest Federal Budget certainly had some delightful surprises for small business owners, none more exciting than the planned $20,000 rebate for small business purchases.
What is it and how does it work?
Well, it’s a two-year tax break for small business designed to get people spending by making certain business-related purchases fully and instantly tax deductible between 13 May 2015 and 30 June 2017.
The scheme will cost tax payers $1.75 billion and anyone who has an Australian Business Number (ABN) and turns over less than $2 million a year is eligible for the scheme.
Business owners can buy new or second-hand items for their business, so long as they cost less than $20,000 and relate directly to your business – such as a new computer, office equipment, tables, chairs, and so on.
As an added bonus, anything over $20,000 attracts the assumption the item will depreciate in value at a rate of 15 per cent in the first income year and 30 per cent in the next income year.
So, once the item price falls below $20,000 you can deduct it.
A word of warning, this scheme will only apply if you pay more tax than what you spend. This is a deduction, not a rebate, plus costs such as marketing aren’t included.
While the scheme is yet to be ratified by the Senate, Federal Treasurer Joe Hockey announced the scheme started at 7.30pm on budget night, 12 May.
Check with your accountant for all the details of the scheme to make sure you are buying what’s right for your business.