The small business sector has been described as the engine room of the economy, as well as the biggest employer in the country – and it’s not hard to see why. Recent research undertaken by the Council of Small Business Organisations of Australia (COSBOA) showed that small businesses were responsible for generating 5.1 million jobs, or around half of private-sector employment. The Australian Tax Office (ATO) says that there are about three million small businesses in Australia, including primary production concerns, which represents around 96% of all business.

The importance of small business is demonstrated by the fact the government gives the small business sector a break on a range of tax matters.

INSTANT ASSET WRITE-OFF

One of the best tax breaks for small businesses is the instant asset write-off, which is a great way for your business to acquire much-needed capital assets to build your business and, at the same time, reduce your taxable profits.

Better still, the tax break has recently been made more generous. Assets costing up to $150,000 can now be written off immediately (previously $30,000 up to 11 March 2020). Now increased to 2023. See budget report in latest article. 

Items you could claim include:

Cash registers and other POS devices
Cars, vans and utes
Fittings and fixtures for your premises
Plant and machinery for your trade
Computers, laptops and tablets
Security systems
Accounting software

Only functioning businesses qualify (it’s not enough to just be a holder of an ABN number).

It’s important to understand the tax break. It is not a cash hand-out but a deduction from your taxable profit. If you spend $30,000 on a capital purchase, you will receive a 27.5% (26% from 1 July 2020) per cent deduction, which equates to an $8,250 reduction in your tax – so you will still be out of pocket by over $20,000 on the purchase. If it’s something you were going to purchase anyway, and it’s a great investment then it’s a win/win.

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