Business owners, you might be eligible for the EOFY asset accelerated depreciation write-off!
Being business owners, the lead up to tax time is both overwhelming at times, but also really beneficial once the forms are done and dusted. Mostly, especially for the last few years, we’ve been eligible for the depreciation asset write-off. And so have a lot of our clients. It’s not the same every year though, so we thought we’d do our best to help you know a bit more about the latest Backing business investment – accelerated depreciation (for the purposes of this blog, we’ll call it BBIAD) scheme this year (that also applies to any assets obtained from 12 March 2020).
We’ll caveat this blog by saying there are heaps of ways to calculate depreciation and it can be a complex and multifaceted process. We aren’t tax experts and you should consult with one to find out for sure that you’re eligible (and to find out any more information around what we cover here).
What is the Backing business investment – accelerated depreciation?
For a lot of businesses, competition can be fierce and the requirement to scale with the best machines and technology available is big. These assets are valuable, but they also come with a price tag. Accelerated depreciation is where an asset loses value more rapidly than it would have without it being applied, and therefore garnering deductions a lot earlier and reduces taxable income
For BBIAD this deduction applies in the financial year that a new asset (or machine) is used or installed for use for tax purposes (i.e., work).
So, you bought a machine after 12 March 2020 & it is installed, you can claim it as a deduction in your upcoming tax return.
Why does this apply to forklift purchases now?
In short, you only then have a few months to wait to get a good chunk of the purchase price back in your tax return. While this isn’t exactly a new thing, it’s always most beneficial at around this time of year because of the relatively short wait time for the return (as opposed to waiting a full year). You can also get a lot more revenue in your job sites with the right machines, earlier.
Who is eligible?
Again, this can be a bit more complex than we’re qualified to comment on. But, the basic criteria is:
Your business has an aggregated turnover of less than $500 million
You first used or installed to use the asset after 12 March 2020, until 30 June 2021
Your asset must be a new one
Please go to the ATO website to seek more information about your potential gain.
Basically, you can be reducing your tax bill by thousands of dollars on a machine purchase that greatly improves the efficiency, productivity and revenue of your business, so it’s definitely worth looking into!
We can’t help you too much with your tax return, but we can help you with your purchase. If you’re in the market for a new machine, give us a call today!