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Perfect Assets to Get for Businesses in Line with ATO 20K Write-Off
Posted by Matthew Maven on 2nd Jan 2016
Every business has its
assets. They contribute to businesses’ profit by being the main components for
manufacturing, product designing, accounting and others. A recent announcement
from the Australian Tax Office (ATO) caused small business owners to start
investing on the right assets in their offices.
ATO released the instant write-off for assets costing lower than $20,000. Businesses can get tax deduction from their assets instantly, a beneficial move if the asset is indeed helping companies gain profit.
Aside from assets worth less than $20,000, entrepreneurs can also get some tax benefits for assets over $20,000 in value if placed in simplified depreciation pool.
These changes drive countless entrepreneurs to start investing on assets costing lower than $20,000. The authorities and tax experts recommended several assets that can be purchased for business use.
IT Hardware
Computers and printers are among the best assets to purchase for this deduction. They are used for almost all business operations and regarded relevant for all businesses. Computers are relevant since they store business data like payroll, clients’ contact numbers, service schedules, and a lot more. Printers are then used for getting the data on paper, which will be used for auditing or income analysis.
Other related assets like photocopiers and scanners may also bring deductions for entrepreneurs due to their relevance in running the business.
Computer software, however, may not be eligible for the write-off even if declared under the software development pool rules.
Work Vehicles
Work vehicles are crucial for product delivery or providing services. These vehicles are mainly used for business purposes to get complete write-off. Luckily, several cars and vehicle types will fall under the ATO-set price range, ensuring businesses can save money in the end.
One thing for entrepreneurs to watch out for is if they use the vehicle for personal and business use. It’s normal for small businesses to use their own cars for both personal and business use. ATO allows this practice and still makes vehicles eligible for the deduction. However, the office will grant discount according to the vehicle’s use for a company. For instance, if a car is used for 70 percent business and 30 percent personal purposes, the office will only give 70 percent of the car’s value as part of the deduction.
Shop or Office Furnishing
Shop and office furnishings are included in the deduction under this new regulation. Furnishing like tables, chairs, and others are used by customers or employees to do their daily business. Other similar furnishing may also be included in the deduction so long as they have the same value.
Machineries
Businesses focusing on manufacturing would need machineries as investment. Machineries vary across all business types. For bakeshops, large ovens, mixers, and kneaders are the main assets that can be considered for these deductions. Processing companies will benefit from specialized machines that boost production volume and efficiency, with those being the main equipment used for manufacturing products for profit. They can also cost a lot of money, which means writing them off for deduction will be a big help for entrepreneurs. After some time, entrepreneurs can invest on additional machineries as part of expansion.
Kitchen Equipment
Special kitchen equipment for restaurants are great help in preparing meals served to guests. Aside from ovens for bakeshops, gas ranges, and other kitchen equipment used for mainly business purposes will become a great help for entrepreneurs with their savings.
Cooling Equipment
Cooling equipment like air conditioning units benefits workers and customers. Their provided comfort makes them assets in businesses.
Air conditioning units have significantly decreased in prices. Regardless of sizes and designs, entrepreneurs will save a lot of money in getting several air conditioning units. Investing on more cooling units will also be helpful when businesses expand with more walk-in clients that need cooling.
Storage Containers
Equipment requires good storage systems to retain their pristine condition. Keeping their original condition also aids in continuous business. A good storage container for machineries will give businesses an edge in protecting their assets. Storage containers are included in ATO’s write-off.
Tradesmen Tools
Tradesmen must have their own tools. This means everyone should be given a set of tools to do their jobs. Companies may also have spares for employees to use in case their tools are not around. Small businesses can now grant each tradesman a tool set as entrepreneurs can get deductions from this asset.
Display screens and Signages
Businesses doing customer services will benefit from display screens as signages for shops and offices. Display screens will show information of the day like exchange rates or client number served. Screens will make waiting a bit more convenient for clients while promoting smooth flow in managing customers.
General Information about Assets
Almost every asset used can be eligible for write-off. However, entrepreneurs must also know some vital details that affect asset eligibility. One is the write-off only applies to purchased, ready-to-use assets. Capital works that utilized construction costs won’t be eligible for this deduction.
As for usage, the asset should be ready to used or easily installed and can be used instantly. Some entrepreneurs may take advantage of this deduction by stockpiling assets then claim deductions even if they are not used for business.
Assets to be claimed for deduction can be brand new or secondhand investments. Entrepreneurs who want to save money by buying affordable, but working secondhand machineries are still eligible for deduction after filing them write-off.
Finally, every asset claimed must be relevant and helpful for the business. Some entrepreneurs may go buying a lot of assets to file for deduction even if they are not related to businesses. A good example is numerous display screens for a utility service provider like electricians. They are not related to the actual nature of business and won’t be granted deductions.
ATO’s new scheme is a helpful way for small businesses to save money on their assets. They can start investing on new assets that improve business operations and customer services. This will bring profit in the long run and help businesses in their expansion.
References:
http://myob.com.au/blog/instant-write-off-for-small-business-assets-under-20000-how-does-it-work/
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