Some great news for Australian Businesses
The 2020 Federal Budget unveiled instant asset write-offs with full deductions, providing positive news and much-needed tax breaks for businesses across the board. Effectively, businesses that make new investments will be able to write off the entire cost in one year, rather than having the asset depreciate over several years.
Who can benefit?
Short answer: 99% of Australian businesses!
Businesses with up to an annual turnover of up to $5 billion can claim immediate tax deductions on the full value of all new, eligible, depreciable assets, according to Tuesday night’s Federal Budget 2020 announcements. These include assets of any value that are first used or installed by 30 June, 2022.
The “immediate expensing” or “loss carry-back” business measures will benefit up to 99%, or 3.5 million businesses, allowing them to claim full deductions for the cost of improvements made to existing depreciable assets.
In releasing the 2020 Federal Budget details, Federal Treasurer, Josh Frydenberg stated that the new investment incentives will allow businesses to expand, upgrade and improve their service and products.
“A trucking company will be able to upgrade its fleet, a farmer will be able to purchase a new harvester and a food manufacturing business will be able to expand its production line,” said Treasurer Frydenberg.
What assets can you claim under the scheme?
All new assets are eligible under the scheme, provided they meet existing criteria for depreciable assets.
Examples put forward by the government include coffee machines, forklifts, tractors, freezers and labellers.
Other examples of depreciable business assets are listed below:
- Computers and software
- Furniture and fixtures
There is also no cap on the value of the new assets that can be claimed. This differs from the existing instant asset write-off scheme, which has a cap of $150,000 for purchases.
The new business measures allow businesses to deduct the full value of their investments upfront, reducing the amount of tax a business will pay. Also businesses are given an extra 6 months to install or first use those assets.
What about second hand assets?
To further encourage businesses to make investments sooner, helping stimulate the economy and create jobs, small-medium enterprises (SME’s) with revenue of up to $50 million will be able to expense all second-hand assets, regardless of value.
Businesses with annual revenue between $50 million and $500 million will still be able to claim a full deduction for second-hand assets of up to $150,000 under the existing instant asset write-off scheme if they are purchased by 31 December 2020.
The instant asset write-off scheme allows businesses who already hold eligible assets to install those assets or bring them to first use has been extended to 30 June 2021.
How to use B2Bpay to gain even more benefits
Taking advantage of the new instant write-off scheme, businesses can commit to investments and purchase assets through the ease and simplicity of B2Bpay.
Your business can buy assets and pay for them by credit card using B2Bpay to:
- Get the tax benefits of being able to write off the cost instantly against your tax
- Improve cash flow by making use of the <55 days interest free by using card
- Ensure your business makes timely and precise payments, well within the extended time frame.
- Earn full credit card reward points on the cost of the purchase (which no longer has a cap!) and Qantas Points on top
B2Bpay allows businesses to:
- Make payments to a supplier regardless of whether they accept credit card or not.
- Make seamless, hassle-free payments, freeing up admin time.
- Set payments as one-off, automatic or future dated.
- Keep accurate records of all purchases and payments, making tax time easier.
- Earn credit card reward points and bonus Qantas Points with every payment, even utility bills and ATO payments.
To sum up
This week’s budget announcing full tax deductions for business investments and eligible assets is optimistic and positive news for majority of businesses, allowing them to expand and thrive even during a difficult economic climate.
Take your business to the next level! Use B2Bpay to make the most of what the 2020 Federal Budget has to offer.
This content above was put together for information purposes only. The Content does not constitute tax and/or legal advice and should not be relied upon as such. You should seek tax, legal or other professional advice before acting or relying on any content.