The Small Business Tax Break And How To Make The Most Of It

Tax BreaksAn important step in building a successful business is ensuring you have the right tools and equipment to support your day to day operations. Whether you’re setting up a new business venture or growing an existing business, getting the foundations right is of extreme importance.

From the 2nd of April 2019, the instant asset write-off threshold was increased to $30,000 by the Australian government. It was increased from $20,000 and the change will apply until the 30th of June 2020.

Your business may experience challenges in managing cash flow when upgrading or replacing a depreciable business asset, which is why it’s important to understand the impact of this $30,000 small business stimulus package for business vehicles, plant and equipment purchases.

Small and medium businesses may be eligible to claim an immediate tax deduction on certain assets costing less than $30,000 each. If it’s time to upgrade your existing business vehicle, plant or equipment, you may be eligible for an upfront 100% tax deduction.

Are you eligible?

As of today, to be eligible for the small business stimulus package, your business must meet the following requirements:

  • Must have an active ABN
  • Your business must be earning an aggregated annual turnover of less than $50 million.

What type of asset can you purchase?

Vehicles and equipment, both new and used, which are purchased for commercial purposes costing less than $30,000 are eligible for the instant asset write-off.

What if the asset is OVER $30,000?

According to the Australian Taxation Office, if you are planning to purchase a vehicle for your business over the $30,000 threshold,  expenses may still be deducted via:

  • Cents per Kilometre
    The mileage rate changes every year, though you may be able to claim 66c for every kilometre your car is driven for commercial and businesses purposes, capped at a maximum of 5,000 business kilometres per car.
  • Depreciation
    Over time the vehicle you purchase will depreciate in value, like any other vehicle. So, the benefit of having a business car means that you can claim some of the loss in value. Assets that cost $30,000 or more (which cannot be immediately deducted under other provisions) may be deductible over time using the general small business pool.
  • Business operating costs
    If your vehicle is used for business and commercial purposes, then you may be able to claim the cost of petrol, servicing or repairs, insurance and even interest on your car loan.
  • Leasing costs
    If your business is leasing your vehicle, the lease payments may be deductible to your business for income tax purposes.

Does the Small Business Stimulus apply to vehicles or equipment under finance?

Yes! If the business vehicle and/or equipment is purchased through a commercial loan, the instant asset write-off still applies. It’s a great time to apply for a commercial loan to take advantage of the Small Business Tax Break. According to the ATO, the $30,000 threshold will only remain until the 30th of June 2020 and will revert back to $1,000 from the 1st of July 2020.

How to get started

On Road Finance offers a range of finance solutions that can be tailor made to suit your business. You can purchase the asset you need, when you need it, and let our brokers handle the finance for you.

On Road Finance can offer Chattel Mortgages, Hire Purchases, Novated Leases and Low Doc Loans for your business.

Cars, buses, trucks, trailers, excavators, mowers, printing equipment, medical and dental equipment, dynamometers, sheds, cool rooms, spray booths, GPS equipment and more! If it’s used for business purposes, On Road Finance can finance it!

Apply online for a commercial loan approval and let On Road Finance grow your business today!

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