/
/

Tax Deductions for Investing in Your Business

Tax Deductions for Investing in Your Business

Stimulating investment is high on the Government’s agenda, including offering tax deductions for investing in your business.
To encourage spending, the 2020-21 Federal Budget introduced a measure which allows businesses with turnover under $5bn to immediately deduct the cost of new depreciable assets and the cost of improvements to existing assets in the first year of use. This means that an asset’s cost will be fully deductible in the year it’s installed ready for use, rather than being claimed over the asset’s life. And, there is no cap on the cost of the asset.

When it comes to second-hand assets the rules are a bit different depending on the size of the business. Businesses with an aggregated turnover under $50 million can claim an immediate deduction for the cost of second-hand assets under the new measures.

Businesses with aggregated annual turnover between $50 million and $500 million can still deduct the full cost of eligible second-hand assets costing less than $150,000 that are purchased by 31 December 2020 under the existing enhanced instant asset write-off. Businesses that hold assets eligible for the enhanced $150,000 instant asset write-off will have an extra six months, until 30 June 2021, to first use or install those assets.

For small business entities that have assets in a general pool the changes seek to ensure that pool balances are completely written-off for tax purposes in the 2021 and 2022 income years.

These super-charged immediate deduction rules tie into the existing instant asset write-off for businesses with a turnover under $500 million (summarised below).

The instant asset write-off only applies to certain depreciable assets. There are some assets, like horticultural plants, capital works (building construction costs, etc.) and certain intangible assets that don’t qualify for the new rules.

If your business will make a tax profit this year, this measure is likely to reduce the taxable income of the business for the year and it may be possible to vary upcoming PAYG instalments to improve cash flow. If your business operates through a company and will make a tax loss, you might be able to use the loss to offset tax paid in previous years (see Refunds for Tax Losses). Alternatively, tax losses can generally be carried forward to a future year.


Still have questions?

If you have any questions or concerns regarding these business tax deductions, remember we are always here to help! Contact our office today.

For more information regarding the incentives released in the 2020-2021 Federal Budget you can also refer to JobMaker Hiring Credits: What We Know So Far and Refunds for Tax Losses on our News feed pages.

    Share this

    Share on facebook
    Share on twitter
    Share on linkedin
    Share on email
    Share on reddit

    Tags

    About the Author

    EnVision Partners
    EnVision Partners
    Tax & Business Specialist
    The Collins English dictionary defines the meaning of ‘envision’ as being to “conceive of a possibility, especially in the future, or foresee”. Our business name reflects our desire to provide our customers with such foresight, something that has not changed since the inception of EnVision Partners in 2002.

    More News

    Get The Latest Updates

    Subscribe To Our Newsletter

    No spam, notifications only about new products, updates.

    More from the author

    Refunds for Tax Losses

    JobMaker Hiring Credits: What We Know So Far

    Welcome to the Team – Meet Corrina and Emma!

    JobKeeper and Early Super Crackdowns Are Coming from the ATO

    Minimum Wage Increase Announced for 2020

    Small Business Adaption Grant Program

    COVID 19 Stimulus: HomeBuilder

    Apply Now For The Western Downs Business Recovery Planning Program

    Western Downs $50 Million (COVID-19) Recovery Package

    $17.6 billion economic plan announced

    Urgent Action Required: Invitation for COVID-19 Assistance Meeting + Business Continuity Plan

    Update on EnVision Partners Response to COVID-19

    QRIDA Succession Planning

    Tax Planning Time

    Tax Hot Spots

    small_c_popup.png

    Learn from the experts

    Five steps to secure your financial future

     

    Life Insurance

    is a lump sum payment that is paid upon death.
    If your partner dies, can you afford to live?
    Have you considered what needs to be paid for when your partner is gone?

    Could you ...

    TPD, Trauma & Income Protection

    TPD Insurance

    ... is paid in the event of permanent disability ...

    Trauma Insurance

    ... is paid in the event of critical illness, such as a heart attack, stroke or cancer diagnosis ...

    Income Protection

    ... is paid if you are sick or injured and cannot work ...

    IF YOU CANNOT WORK...

    Expression of Interest

    Fill in the form to register your interest in our events & we will be in touch.