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Emerging IT Insights

Only 8 Months Left for Capital Purchase Deductions


Guest Writer

Emerging IT

News & Technology

If you’ve been putting off major capital purchases, perhaps updating office PCs, laptops or servers – perhaps FY17 is the year to do it. 

The ‘instant asset write off’ is one of the many tax concessions available to Small Business Entities (SBE). In last year’s budget, the threshold for an immediate tax deduction on capital purchases was raised from $1,000 to $20,000.

This threshold applies until 30 June 2017, after which it drops back to $1,000. This means a business with turnover of less than $10M has only have seven months left to take advantage of the $20,000 instant asset write-off. 

How the 'write off' works...
A small business spends:

  • $30,000 on new PCs;
  • $15,000 to update servers;
  • For total capital expenditure of $45,000.

Each asset is worth less than $20,000 and qualifies for immediate write off. This means a smaller business can claim an immediate tax deduction of $45,000, which is a tax saving of $12,825. It would take a larger business four or more years to claim back that same deduction.

*Please note: this is a timing benefit because the tax deduction has been brought forward. This month’s customer story provided by Prime Partners, Specialists in small business accounting and advice. 

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