PRE 1 JULY 2017- Making the most of the $20K deduction for small business before it expires

Posted by Darren April 6, 2017

Many SBE’s (Small Business Entities- businesses with an aggregated turnover less than $2 million) have utilised the benefits of the $20K immediate deduction legislation since it was introduced in May 2015.


This $20K threshold will end on 30 June 2017, when the threshold drops back to the former $1K immediate deduction.


As such, many businesses are looking to maximise their use of this rule before time runs out. It is important to consider that the Australian Tax Office (ATO) will only class a purchase as being eligible for this type of immediate deduction when the asset is being used for an income-producing purpose. The ATO does state it will monitor how the write-off is being claimed to make sure there is no rorting of the system.


All depreciating assets (including new and second hand) are eligible, except for a small number of exclusions which receive different depreciation treatment. 


Excluded assets include:


  • Horticultural plants - subject to their own ‘uniform capital allowance’ rules (UCA);
  • Capital works – subject to their own ‘capital works’ depreciation rules;
  • Assets allocated to a low-value pool or software development pool - subject to the deduction rates applicable under those rules;
  • Primary production assets for which the entity has chosen to use the normal depreciation rules rather than the simplified depreciation rules; and
  • Assets leased out to another party on a depreciating asset lease.


Keep this information in mind as we head towards 1 July 2017 to maximise your claims at tax time.

 If you have more questions or would like to consult an accountant regarding the $20K depreciation legislation, please call our office on (02) 4655 9247.


The above information has been prepared without taking into account your objectives, financial situation or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs. Wards Accounting Group Pty Ltd (ACN 105 280 831) ABN 32 105 280 831  is a Corporate Authorised Representative of Merit Wealth Pty Ltd ABN 89 125 557 002, Australian Financial Services Licence Number 409361

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