Welcome to the Small Business Treasure Chest. I have had a look inside and found some amazing jewels to share with you.
Join me over the next few days to view these very helpful tips that will help you reduce your Income Tax for 2020.
The first jewel I have found is the Instant Asset Write-off.
This enables you to claim an immediate deduction for the full value of a business asset bought, rather than write it off over a few years.
The effect is that it will increase your expenses and therefore reduce your taxable income resulting in a lower tax bill. What a win!
The threshold for this write-off was increased from $30 000 prior to Covid-19, to $150 000. This increased threshold is applicable for a business asset being used or ready for use in your business between 12 March 2020 and 31 December 2020.
So an invoice dated 28 December 2020 for an asset that you only receive on 2 January 2021 will not qualify.
And it is not limited to only one asset. It can be applied to as many separate assets as you purchase with no limit.
It obviously only makes sense to take advantage of this, if you firstly will have taxable income and if you actually need an asset to improve your business and thirdly if you have the cash flow to purchase the asset.
Now you must be thinking, Oh WOW, I can finally buy myself my dream car.
Not so fast …
Depreciation on passenger vehicles are limited to $57 581 but any machine or truck could be claimed up to $150 000 ex gst.
Now what is very very important to be aware of, is that from 1 January 2021 the threshold is going to decrease to $1 000. Yes a massive difference so think carefully NOW about making a purchase to improve your business.
Should you wish to discuss any of the above further, please send me an email to email@example.com or give me a bell on 0421 824 137.