Small businesses can save big this year with the Australian Taxation Office’s immediate write off for assets valued at less than $20,000. The measure was originally introduced in 2015, and was set to expire on June 30, 2017, though it’s now been extended to run through the 2018 fiscal year as well.
Of course, this deduction isn’t just meant to help businesses recover funds they incidentally used to invest in assets for their business. Rather, it’s a calculated measure to empower small businesses in Australia. Businesses who are aware of this can strategically purchase the equipment they need to grow and compete effectively without being forced to take on more long-term debt to do so. It’s an incredible opportunity to build and add value to your business.
Who is eligible?
This measure was introduced to strengthen Australian business, and to encourage the growth of a diverse and competitive economy in the country. To that end, it is specifically targeted to support smaller businesses to help them grow and become established.
It was originally intended to serve only small businesses with an aggregated annual turnover of less than $2 million, which is the the figure the ATO uses to define small businesses. That limit has now been raised to also include some larger, medium sized businesses with a turnover of up to $20 million. This helps SMEs in general to better establish themselves and to compete against large and well-established industry leaders.
What kinds of assets can be deducted?
Not every kind of asset qualifies to be deducted. Besides valuing less than $20,000, assets need to be depreciable, meaning that the value of the asset can be considered a business expense over its life. Additionally, a few types of depreciable assets are also not eligible. These include:
● Horticultural plants
● Capital Works
● Assets that are allocated to a low-value pool or a software development pool
● Assets for which your business has opted to use the normal depreciation rules rather than the simplified rules
● Assets that are leased out to another party with a depreciating asset lease.
Besides these restrictions, any asset claimed in 2017 needs to be put into use, or installed and ready for use before it can be written off. This is to discourage businesses from acquiring assets that they don’t intend to put to proper use.
Great, but what’s the catch?
To claim an instant asset write off for your business in 2017, you’ll need to purchase and install your new asset before the end of the fiscal year on June 30. That means, of course, that your business needs up to $20,000 in liquid funds in order to make any purchase that can then be recovered with the instant deduction. For many small businesses, the cost of that kind of purchase can be prohibitive, especially with that June deadline approaching. Businesses that can’t afford to purchase an asset in the first place seem to simply be out of luck. That’s where we come in.
How Fifo Capital can help
At Fifo Capital we specialise in bridging these types of cash flow gaps. If you don’t have the funds to take advantage of the instant asset write-off this year, we can help! We can work with you to make sure that you have access to the funds you need. You go out and purchase the asset you need, and later recover your funds using the deduction to repay the advance according to Fifo Capital’s standard finance terms and conditions.
We get you funded fast
Purchasing, shipping, and installing your new asset will take time that you can’t afford to spend negotiating. Unlike many more traditional finance institutions, Fifo Capital is built for speed. Our services are designed to help businesses manage cash flow interruptions, and to quickly access funds for growth or other purposes. We’ll review your application and advance your funds in 24-48 hours, and subsequent applications from established customers are generally processed within just 4 hours.
The ATO’s instant asset write off is an amazing opportunity for businesses to increase their growth potential and add value. Failing to take advantage of this measure essentially means losing out on a $20,000 tax break from the Australian government. No business should be forced into such a situation just because of a lack of liquid funds. Fortunately, your business doesn’t have to be, regardless of your current financial state. Give us a call today to chat with one of our representatives about how we can help you get the funds you need!