Small Business Support (1 July 2023 to 30 June 2024) - full purchase value of per assets less than $20,000
$20,000 instant asset write-off (turnover of less than $10 million)
On 9 May 2023, as part of the 2023–24 BudgetExternal Link, the Australian Government announced it will improve cash flow and reduce compliance for small businesses by temporarily increasing the instant asset write-off threshold to $20,000, from 1 July 2023 until 30 June 2024.
This measure is not yet law.
Small businesses, with aggregated turnover of less than $10 million, will be able to immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use between 1 July 2023 and 30 June 2024.
The $20,000 threshold will apply on a per asset basis, so small businesses can instantly write off multiple assets.
Assets valued at $20,000 or more (which cannot be immediately deducted) can continue to be placed into the small business simplified depreciation pool and depreciated at 15% in the first income year and 30% each income year after that.
The Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Bill 2023External Link containing the Small Business Support – $20,000 instant asset write-off measure is currently before Parliament.
More information is available on the ATO website &ATO Small business newsroom
Small Business Support (1 July 2023 to 30 June 2024) - Full purchase value of assets more than $20,000
small business pool and depreciate (turnover of less than $10 million)
Per the Budget papers, assets with a value of $20,000 or more (those ineligible for immediate deduction) will maintain eligibility for placement in the small business simplified depreciation pool. They will be subject to a 15% depreciation rate in the first income year and 30% in each subsequent income year.
Methods of Business Asset Acquisition:
As a business owner, there are several avenues available for procuring a business asset:
- Buy Outright: With this method, you use your own funds to make a direct purchase of the asset. Since you own the asset outright, you have the ability to depreciate it for tax purposes.
- Finance Options: There are various financing alternatives to consider:
- Chattel Mortgage: In this popular finance option, you gain immediate ownership of the asset, and the loan is secured against it. You can tailor the loan term, typically up to 5 years, and you have the ability to depreciate the asset.
- Finance Lease: With this option, the lender retains ownership of the asset, and you assume the risk of disposal at the end of the lease. A residual amount is often payable when you take ownership. As you don't own the asset, depreciation is not applicable, but you can claim the lease payments each month.
- Operating Lease: Under this choice, you never own the asset, and you return it at the end of the lease term. Since you lack ownership, depreciation doesn't apply. However, similar to a finance lease, you can claim the lease payments as expenses.
- Hire Purchase: This arrangement involves your business and a lender, with the lender purchasing the asset at your request and granting your business usage in exchange for regular payments. You gain ownership of the asset at the end of the financing term.
You're eligible if:
• You have an ABN
• At least 20 square metres of roof space
• Own the building or have your landlord's consent
Looking to expand your existing solar system? that's fine. You're still eligible for government grants to upgrade your system even if you've already claimed it in the past.
If you would like more information on government incentives for solar please get in touch on 1300 319 866, or submit an enquiry online.
