Have you taken advantage of the instant asset write-off?

The Australian Taxation office increased the instant asset threshold to $20,000 this year. Effective from May 12 2015, this new legislation allows small to medium enterprises (SMEs) to write off any assets costing less than $20,000 when it comes to income tax.

New limits, increased benefit

Previously limited to $1000, this new law allows for many new assets to become tax free, ranging from new computers right up to vehicles and transport. The deduction comes from the business portion of an asset, and is required to be depreciating in value (so no property allowed), but other than the pricing threshold, this is a huge increase and massive tax benefit for SMEs.

Some assets are still not available for write-offs, such as horticultural plants and other items that have their own unique rules associated with them.

It has been reported that more than 99,000 small businesses have already claimed this new tax, with claims totalling $418 million. This is a huge increase from this time last year, in which only 78,000 businesses had claimed the tax, coming to $250 million.

The reason for the new legislation

Tax deductions of this nature are designed to help stimulate and remove strain on Australian SMEs, which will in turn help improve the total Australian economy. With such a large number of the residents of Australia either running or being employed by SMEs, it is little wonder that the Australian government is affording them such significant tax breaks.

It is important to keep records of these deductions in order to make claims for them, and with such a wide range of new items available for tax deduction, it may be a good idea to consider hiring a tax accountant to ensure all of your records are up to date and income tax ready.