Did you know you can claim your workshop back at Tax time? This is great news for those of you who have either purchased a new workshop or are planning one.
By now you may have heard that this tax time the ATO has accelerated depreciation for small business tax deductions. The accelerated depreciation table now reaches $20,000. This is a big difference because the former immediate tax deduction for small business was limited to $1000. Quite a leap and well deserved. Ace.
So What are the Conditions and Tax Deduction Possibilities?
Of course, there are some stipulations on the accelerated depreciation for small business owners. Before the tax deduction for a workshop to be used for storage in your business would have had to be depreciated over the course of several years,
Before, the tax deduction for a workshop being used for storage in your business would have had to be depreciated over the course of several years. NOW you can claim an immediate tax deduction for each asset costing $20,000 or under.
As an example, consider Paul. Paul owns a small business selling novelties and determines that he needs additional storage for supplies. He buys a workshop for $10,490. His company can immediately deduct the entire cost of the workshop. He can do the same with any other assets needed this year provided the asset has a direct impact on production and is valued under $20,000.
However, before you rush out to buy ‘assets’ to claim you should know that the ATO says it’s going to monitor how the write-off is being used.
What about Farm Use Workshops?
As a special note to those with small farm businesses, especially those involving livestock. The ATO is also relaxing rules related to depreciation of other assets used in your small business. For instance, a primary producer can now use a three-year depreciation of fodder storage assets. This small business tax deduction may be claimed even if the business-owner is not the primary land owner. Thus, lessee’s may take advantage of this aspect of the new accelerated depreciation tables.
Fodder storage assets include,
- Grain storage workshops
- Bins for storing dry grains
- hay storage sheds
Lastly, those with a small business should note that the current Lock Out rules will be suspended for the duration of the accelerated depreciation tax deduction.
The Duration? Yes. The accelerated depreciation tax deduction for small business officially ends 30 June 2017. Whether Parliament makes it permanent or not we cannot say.
So if you are thinking of a new workshop for your small business, now is the time to get one. You not only get the workshop you need, but a tidy savings with the Accelerated Depreciation tax deduction for small business as well.
Please do not take action solely based on the information of this article, this is not a tax advice. If in doubt, please check with a qualified chartered accountant. An accountant will be able to give you advice based on your individual situation and circumstances. Also find out more on the ATO website, click here.