2015 Budget – Changes to Capital Purchase Deduction for Small Business

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  • Updated 5 years ago
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The 2015 Australian Government Budget contains an important windfall for small business in the form of accelerated depreciation when purchasing capital items up to $20,000 (ex GST).

Previously, tax deductions in the financial year of a capital purchase were only available for items up to a value of $1,000. Capital items over $1,000 previously needed to be depreciated and claimed over several years, generally being the useful age of the item to the business. This threshold has now been increased to $20,000 for each individual purchase made after 12 May 2015 (7:30pm) and installed in the business by midnight 30 June 2017.

To qualify, businesses must have a turnover of less than $2 million a year. For more complex business structures with associated companies, turnover is to be aggregated. We believe that most allied health practices will fall within the eligible criteria for this incentive.

Some consideration should be given to how you pay for or finance capital items over this period. For example, if you lease an item you don’t own it and are not eligible to claim the accelerated deduction. Paying upfront or using other forms of finance where you own the item, such as a chattel mortgage or asset finance may be preferable.

Due to this incentive, it’s currently a tax effective time to consider upgrading your practice plant and equipment, including your computer systems.

This information has been provided as general information only and should not be considered as professional advice. You should seek your own advice from your accountant or qualified adviser who understands your individual requirements and financial needs.

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Tony Taddeo, Managing Director

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Posted 5 years ago

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