It seems like the Australian government is out to make a big impact on the economy as it unrolls its Federal Budget plans for 2015: What was once a $1,000 tax write-off limit became $20,000 overnight.
That’s right. You’re now looking at small business lifesaver.
Designed to stimulate the economy, the unprecedented value of the tax write-off caught a lot of attention and praises from people particularly from the small business sector who were asking for a much-needed jolt.
However, there are two caveats: this tax write-off will only last until the end of June 2017 and you have to make the most out of the $20,000 tax write-offs before June 30, 2015 so you can apply deductions on your 2014-2015 tax returns.
So what should you do to make the most out of the $20,000 write-off before June 30 comes?
Here are 3 ways to do so:
- Shopping Spree
First things first.
Ramp up your business operations overnight by purchasing all the furniture, fixtures, appliances, and equipment you need within the $20,000 cap that would do either of the three:
- Boost your employee’s productivity and morale
- Improve your customer’s experience
- Provide an overall improvement to your small business in general
For the employee’s side of the spectrum, that could mean purchasing mobile phones for your employees for easier communication, It could also mean buying a new Point Of Sale system designed to keep up with the growing demand for your business, it could also mean setting up CCTV cameras in order to easily monitor your business in action or it could also mean purchasing a fuel-efficient car that elevates the burden of the expensive gas prices.
From the customer’s point of view, tables, chairs, and carpets are good for the tax write-off. You’d better purchase furniture that is durable but comfortable, improving the customer’s experience at your small business. You can also purchase assets like carpets, tiles, and other visually appealing items that would help your business’s aesthetics, generating increased foot traffic for your small business.
As long as what you’re paying is for the improvement of your business operations, anything within the $20,000 cap is good for purchase. Computers, a fax machine, kitchen tools, heaters, air conditioners, security systems, solar panels, water tanks, generators, photocopying machines and even ovens, refrigerators, and coffee blenders!
- Upgrade Your Business Assets
If you’re just looking at maintaining your small business operations in tip-top form, it makes a lot of sense to just go for an upgrade.
Instead of purchasing a new company car that adds to the current number of company cars without increasing the operational efficiency of your small business, going for an upgrade could be a smarter move. One option is to go for a cost-efficient upgrade and sell off the car your small business presently has, and then use the proceeds of the sale to purchase that new car that you have had your eye on for a while now.
A well-run business aiming for stability runs the risk of chaotic operations and needless expense when it tries to go out of its way to add more than it should have at its present state.
If this is the present strategy of your small business, then resist the temptation of adding up needless furniture, fixtures, appliances, and equipment, and just upgrade everything.
- Repair, Repair, Repair!
If you’re taking a prudent view, then repairing every piece of furniture, fixture, appliance, and equipment is the best strategy for your small business’s $20,000 tax write-off.
Choosing this route allows you to maximize your tax write-off the best by ruthlessly choosing which part of your small business needs an upgrade the most, which area of your small business’s operations needs an additional set, or which appliance, furniture, fixture or equipment can get by with a mere repair.
While dull and time-consuming, this method works best with small businesses trying to get by as best as they can.
Another Tax Write Off Caveat
While the $20,000 tax write-off is considered extremely generous, it still has some limits when it comes to improving your business operation efficiency.
Some of these include the stock for your business, which means using the tax write-off to replenish your stock or to increase the number of stock your business has won’t necessarily apply to your 2014-2015 tax return. So get the right advice before you attempt to do this or run the risk of incurring unexpected expenses your small business isn’t prepared to face.
Another area that is off-limits to the $20,000 tax write off is the marketing costs of your small business. Like the attempt to replenish or increase your stock, it may only incur cash flow headaches for you and your business.
If you’re planning to include your office software as part of the tax write off, get the right advice as it may be excluded from the $20,000 write-off as well.
If the item I bought is included in what is classed as deductible and is over $20,000, is it okay?
The answer is a qualified yes.
You can still claim the item but it would also mean the item you purchased is subject to very complicated tax break rules, brought upon by depreciation, which is ultimately less generous than the initial $20,000 tax break offer.
What should I do next?
It can be difficult to get a handle on the rules and systems revolving around the Federal Budget 2015’s $20,000 tax write-off for small businesses. Understanding how it works when you’re within the $20,000 limit and going over the limit can be complicated!
Not to mention the execution required to maximize this great small business opportunity seamlessly, getting the most out of the $20,000 tax write-off requires the decade-long expertise of qualified bookkeepers and accountants alike.
No matter what your strategy will be, the state of your business, or how you’re going to use the tax write-off, it makes a lot of sense to get all the professional help you can get. Contact us and let us help you provide quick and complete solutions for the $20,000 write off before June 30 comes!