A new study by Officeworks revealed that almost half of the Australian small business owners (49%) are unaware of the increase in the threshold for instant asset write-off. The report also found that 71% of those surveyed found the tax system for small businesses confusing.
In April this year, the Federal government increased the asset write-off threshold for assets purchased before 31 December 2020. This means that eligible businesses can claim an instant tax deduction equivalent to the cost of the assets up to the threshold amount for the current financial year.
Officeworks Chief Operating Officer, Michael Howard, said: “Looking at where to take advantage of business tax breaks can be an effective way for small business owners to save money or offset losses.”
“Yet, many small businesses don’t take advantage of them because they’re unaware of what’s available to them.”
The $150K tax-break
As per the official government website, small and medium businesses can claim an instant tax deduction for each asset that costs up to $150,000 (up from $30,000). Eligible businesses must have an annual turnover of less than $500 million (up from $50 million). Total assets must cost less than the instant asset write-off threshold.
The website outlines that $150,000 Instant Asset write-off provides businesses with an asset write-off, and assets must cost less than the instant asset write-off threshold and be purchased and used in the year that the write-off is claimed.
Other findings
- The SBO’s, who intend to use the instant asset write-off, plan to spend an average of $24,955 before June 30, 2021.
- Nearly 27% of SBO’s saw an increase in their year-on-year spending for office supplies, furniture and assets.
- Three out of five small business owners are worried about the growth and stability of their business beyond the COVID-19 pandemic.
- Over 40% of SBO’s who reported that they don’t usually complete their tax return will complete one this year.
Working from home
Australians working from home (WFH) can claim a rebate for expenses incurred relating to the work. These can be additional running expenses such as utilities, the decline in equipment value, furniture-related costs or phone and internet expenses.
The study finds that just over half (54%) of Australian workers WFH would have changed their purchasing behaviour if they had known WFH purchases were tax-deductible. While about 24% said they would have purchased more items, and 19% would have bought more expensive items.
“If you have financially assisted employees with setting up their dedicated workspace or room at home, you are likely to be able to claim a work-related portion for home office expenses,” Mr Howard said.
“If you are running your own business from home, you may also be able to claim the work-related share of occupancy expenses.”
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