If you're a small business owner, it's going to be easier for you to understand how tax rules apply to your assets after 1 July this year.
- The entrepreneurs' tax offset, which allowed low-income small business owners to offset up to 25% of tax payable on their business income, will be abolished.
- Under amendments to capital allowance arrangements for small business, the small business instant asset write-off threshold for low-cost assets will increase to $6,500. This means you will be able to claim an immediate deduction for the cost of an asset you buy for your business if you pay less than $6,500 for it.
- You can consolidate your general small business asset pool (for assets with an effective life of fewer than 25 years) with your long-life small business asset pool (for assets with an effective life of more than 25 years). As a consequence, you can choose to move all assets costing more than $6,500 into a new general small business pool, and claim a deduction for their depreciation at the same annual rate of 15% in the first year and 30% thereafter.
- Lastly, new accelerated initial deductions for the purchase of motor vehicles will allow you to claim up to $5,000 as an immediate deduction. The remainder of the motor vehicle value can then be pooled in the general small business pool.
