Talking Pest Control: Write off $20,000* in Tax
Last chance to write off $20,000* in new equipment
Pest controllers, along with other small businesses, now have until June this year to instantly write off up to $20,000 in new assets or equipment.
The Instant Asset Write Off scheme, introduced by the Australian Federal Government in 2015, allows small businesses to instantly deduct up to $20,000 of depreciating assets on their tax return. Previously, the threshold was only $1,000. This is good news for pesties: by investing in new gear, you can instantly reduce your taxable income (and your tax payable) by up to $20,000 and improve your cash flow.
Although the scheme was due to end last year, the deadline for write-offs has now been extended until June 30, 2019. After this date the threshold will reduce to $1,000 once again.
Before you get spending, here are some details to be aware of:
- The scheme applies to businesses with an annual turnover of up to $10 million. Previously, the scheme only applied to businesses with $2m turnover, but this was increased to $10m in July 2016.
- The deduction must be made in the same financial year the asset is first used or installed for use in your business. To find out if an asset you’re planning on purchasing is eligible, see your tax accountant.
- You can only claim the portion of the asset you use for business purposes. If you buy a work vehicle and only use it 50 per cent of the time for work, you can only claim 50 per cent as a write-off.
- You cannot claim assets that cost over $20,000. For example, if you purchase an asset for $22,000, you can’t claim just $20,000 of that asset under the scheme. Items over $20,000 continue to be deducted over time using the general small business pool. Also keep in mind that the cost of an asset includes how much you spend transporting and installing it.
- There is no limit to how many assets you can claim the deduction for. You can claim multiple assets, so long as each asset is less than $20,000.
Before making any purchase, make sure you check with your accountant for advice. Note that since the time of filming and writing, changes have been made to the scheme.
*Note that since the time of filming and writing, changes have been made to the scheme, with the threshold increasing to $30,000! The latest up-to-date details on the scheme can be found here: https://bit.ly/30MzwXk
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