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The Instant Asset Write-Off Continues To The 2024-25 Financial Year

Posted on May 28, 2024 by admin

In a move aimed at bolstering small business cash flow and reducing compliance costs, the Government has announced an extension of the $20,000 instant asset write-off for another 12 months.

This extension, part of the 2024–25 Budget released on 14 May 2024, will see the measure continue until 30 June 2025.

This initiative allows small businesses with an aggregated turnover of less than $10 million to immediately deduct the full cost of eligible assets costing less than $20,000. To qualify, these assets must be first used or installed and ready for use between 1 July 2023 and 30 June 2025.

Eligibility

Eligibility to use instant asset write-off on an asset depends on:

You are not eligible to use the instant asset write-off on an asset if your aggregated turnover is $500 million or more.

If temporary full expensing applies to the asset, you do not apply the instant asset write-off.

How Does It Work?

The $20,000 threshold applies on a per-asset basis, providing substantial flexibility for small businesses to acquire and immediately write off multiple assets. This can be particularly beneficial for businesses looking to upgrade equipment, invest in new technology, or make other capital improvements without the burden of prolonged depreciation.

The immediate deduction is unavailable for assets valued at $20,000 or more. However, these higher-cost assets can still be placed into the small business simplified depreciation pool. This method allows businesses to depreciate the asset at a rate of 15% in the first income year and 30% each year thereafter, providing a structured yet advantageous depreciation timeline.

The continuation of this measure is designed to aid small businesses by improving their cash flow and reducing the administrative burden associated with asset depreciation.

By allowing immediate deductions on lower-cost assets, the government aims to incentivise investment and growth within the small business sector. However, this will be dependent on the individual circumstances of businesses as to whether or not they may benefit from this measure.

What About The Legislation Of This Measure? 

It’s important to note that while these measures have been announced, they are not yet law. The Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Bill 2023, which includes provisions for the $20,000 instant asset write-off for the 2023–24 income year, is still before Parliament.

Once passed, this legislation will formalise the extension and ensure small businesses can continue to benefit from these deductions through to the new deadline of 30 June 2025.

The $20,000 instant asset write-off extension could be a significant boost for small businesses, providing immediate financial relief and encouraging ongoing investment in business growth and development.

Small business owners should monitor the legislative process to ensure they can take full advantage of these provisions once they become law.

Speak With Us

If you have any questions about this measure or if it would be suited for your business, why not speak with one of our trusted team for answers? We are here to assist you with any questions or enquiries you may have in the lead-up to the end of the financial year.

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Meeting Your Business’s Tax Obligations At The EOFY

Posted on June 10, 2024 by admin

As the End of the Financial Year (EOFY) approaches in Australia, businesses must gear up to meet their tax obligations efficiently and accurately.

This period can be hectic, but with careful preparation, you can ensure compliance with Australian Taxation Office (ATO) requirements and optimise your financial outcomes.

Here’s a comprehensive checklist to help your business prepare for EOFY tax obligations, including lodging Business Activity Statements (BAS), reconciling accounts, and more.

1. Review and Reconcile Accounts

Task: Reconcile Bank Statements
Task: Review Accounts Receivable and Payable

2. Update Financial Records

Task: Inventory Stocktake
Task: Fixed Assets Review

3. BAS and GST Lodgement

Task: Prepare and Lodge BAS

4. Payroll and Superannuation Compliance

Task: Finalise Payroll
Task: Superannuation Contributions

5. Review and Claim Deductions

Task: Identify Deductible Expenses
Task: Claim Depreciation

6. Financial Statements Preparation

Task: Prepare Financial Statements

7. Plan for the New Financial Year

Task: Budget and Forecasting
Task: Review Business Structure

8. Ensure Compliance with ATO Requirements

Task: Review Tax Compliance
Task: Lodge Tax Return

Preparing for EOFY tax obligations can be a complex process, but with a systematic approach and detailed checklist, you can ensure compliance and optimise your financial outcomes.

Regularly reviewing and updating your financial records, reconciling accounts, lodging BAS statements on time, and claiming all eligible deductions are crucial steps.

Additionally, planning for the new financial year and consulting with a tax professional can help you navigate the complexities of tax compliance and make informed financial decisions.

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