Budget Changes from Earlier This Year.

If you’re running a small business, something under $2 million a year, you can claim back purchases under $20, 000. Previously this threshold was set at $1000. The usefulness of this varies. If you are a trade-worker deducting tools or a café owner buying a new coffee machine the new threshold will be useful. If you are setting up something major, however, it can still be an issue. A work vehicle is unlikely to come under $20 000, even though this is a feasible purchase for any business. Industrial items over $20 000 suffer a similar fate. However, an expensive item can still be deducted over a period of several years.

What most people miss is the fact there is no limit to the number of $20 000 items deducted. It isn’t a total of $20 000 for all the items together, you can deduct as many under $20 000 items as you like. As such, it might be a good time to stock up.  It might be a good time to start a small business.

As the tax rate for this small business group also falls from 30% to 28.5 % there is an increased benefit. This is the lowest small business tax in a generation. Sole traders will have some further benefits, with a 5% tax discount up to $1000.oo

As more than 95% of businesses in Australia fall under the $2 million threshold, making them eligible as small businesses, this will benefit a lot of companies. We hope it doesn’t discourage anybody from expanding their operation above the $2 million threshold.

The program looks to stay in place until the end of the 2017 financial year.