You buy an asset.
A car for example.
For running around doing quotes onsite.
Its value will GO DOWN (aka depreciate) over time.
So the tax man lets you claim that depreciating value – Thanks, Tax Man!
If the asset is $20,000 and under you get 100% tax deduction NOW.
You can claim depreciation … bit by bit over the next 8 years. Sad Face.
(If you want the detail, here’s how much depreciation you could claim in the first year: Only up to a maximum of $5,000 in the first year, but this amount gets lower the further into the financial year that you buy it. If you buy the car on 30 June, you would only get a $13 tax deduction!! boring…)
You get a 100% Tax Deduction this year. Woohoo!
So if you were already shopping for a new asset for the business, remember the magic number – $20,000.
This strategy has been around since May 2015.
Your accountant should have made you aware if they’re a good adviser for your business.
This is the limit that the ATO advised in the May 2015 budget.
What if I turn over more than $2,000,000 can I still use the strategy?
No, sorry. The strategy is only available for what the ATO calls ‘Small Businesses’ – those who turn over less than $2,000,000.
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