Business Tip - Delay Asset Purchases
Imprest Business Services
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Small business taxpayers will soon benefit from more generous depreciation rules which will ultimately improve cash flow by allowing bigger deductions in earlier years following the purchase of a depreciating asset (e.g. office machines, furniture, equipment, cars etc.). Commencing 1 July 2012, small business taxpayers (i.e. those with an annual turnover of less than $2 million, including the turnover of affiliates and associated entities) will benefit from the following two measures:
1. Increased instant asset write-off threshold:
From 1 July 2012, small businesses will be able to write-off depreciating assets costing less than $6500 (up from $1000) in the income year in which they start to use the asset or have it installed ready for use. In view of this measure, if you are thinking of purchasing a low value asset between $1000 and $6500 for your business, to get a cash flow advantage you may wish to delay the purchase until after 30 June 2012.
2. Special rules for cars:
From 1 July 2012, a small business can write-off as an immediate deduction the first $5000 of a car in the income year in which they start to use it (new or second-hand). The remaining value of the car is depreciated as it is now - through the small business
general depreciation pool at a rate of 15% in the first year and 30% in later years. Again, in light of this measure, it may pay to delay the purchase of any business-related vehicle for another few months (until after 30 June).
Information provided by the Australian Bookkeepers Network Pty Ltd
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