How can the new, simplified tax rules can help my small business?

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How can the new, simplified tax rules can help my small business?

If you’re a small business owner, it’s going to be easier for you to understand how tax rules apply to your assets after 1 July this year.

1. The entrepreneurs’ tax offset, which allowed low-income small business owners to offset up to 25% of tax payable on their business income, will be abolished.

2. Under amendments to capital allowance arrangements for small business, the ‘small business instant asset write-off’ threshold for low-cost assets will increase to $6,500. This means you will be able to claim an immediate deduction for the cost of an asset you buy for your business if you pay less than $6,500 for it.

3. You can consolidate your general small business asset pool (for assets with an effective life of less than 25 years) with your long life small business asset pool (for assets with an effective life of more than 25 years). As a consequence you can choose to move all assets costing more than $6,500 into a new general small business pool, and claim a deduction for their depreciation at the same annual rate of 15% in the first year and 30% thereafter.

4. Lastly, new accelerated initial deductions for the purchase of motor vehicles will allow you to claim up to $5,000 as an immediate deduction. The remainder of the motor vehicle value can then be pooled in the general small business pool.

2016-07-14T10:41:35+10:00
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