A great time for a Fit Out
THE FEDERAL GOVERNMENT’S 2015 BUDGET OFFERS GREAT NEWS FOR SMALL AND MEDIUM-SIZED BUSINESSES - PARTICULARLY THOSE CONSIDERING A FIT OUT FOR THEIR BUSINESS.
If your business’ annual turnover is less than $2 million, not only do you get a 1.5% tax cut, but the Government has raised the immediate tax deduction threshold for individual assets to $20,000 (up from $1,000). This limit applies to individual assets and can be applied to as many items as a company wishes.
What this means simply is that it’s an excellent time to invest in your business. If you’ve been wanting to fit out a new shop, office space, pharmacy, or undergo commercial renovations, your patience has paid off.
This increased tax deduction threshold applies to assets purchased from 7.30pm on May 12, 2015, through until June 30, 2017. Keep in mind, this proposal has yet to pass into legislation, so keep up to date with developments as they occur: https://www.ato.gov.au/General/New-legislation/In-detail/Direct-taxes/Income-tax-for-businesses/Small-Business---expanding-accelerated-depreciation/?page=1#Information_alert___Immediate_deductibility_for_assets_less_than__20_000
An inviting fit out is undoubtedly an asset to small business who want to create a streamlined experience for their customers, and keep them coming back.
The following example, taken from Smart Company, demonstrates the substantial savings this tax deduction means for Small Business owners:
A bakery is run as a company. The business purchases a new oven for $13,750 and a new proofing cabinet for $3500 to replace its old, worn-out equipment. Under current law, because these assets each exceed the current $1000 threshold, they would be included in the accelerated depreciation pool. Of their combined $17,250 cost, only 15%, or $2588, would be depreciated in the first year. With a company tax rate of 30%, this means that the company would only get $776 back on its tax in the first year.
Under the new $20,000 threshold, the company will be able to claim an immediate deduction for both the new oven and the new proofing cabinet, giving an immediate deduction of $17,250. With the new small business company tax rate of 28.5% from 1 July 2015, the company will get $4916 back on its tax. So, under the new $20,000 threshold for accelerated depreciation, the company would receive an additional cash flow benefit of $4140.
Check out the full article here: http://www.smartcompany.com.au/finance/tax/47014-sme-20-000-instant-asset-tax-write-off-explained-and-it-applies-to-second-hand-assets-too.html#