Part of this year’s Federal Budget contains a key win for small businesses in the form of accelerated depreciation for expenditure on capital items1. Prior to this budget, small businesses were eligible for an immediate tax deduction for all capital expenditure on items of plant and equipment that were installed and ready for use during the financial year up to a value of $1,000. The good news is that the proposed budget measures have increased this threshold up to $20,000 for business that have an aggregated turnover of up to $2 million.
Important to note is that the budget is quite clear that this is “aggregated” turnover. So if the small business has two companies, both with a turnover of $1.5 million, then the aggregated turnover of the business group is $3 million, and therefore the small business would not be eligible for the new accelerated depreciation.
The period for which this increase in threshold is applicable is from 7:30pm 12 May 2015 through until 30 June 2017. So if a purchase was to be made it must be made during this period and the item must be installed in the business ready for use by
midnight 30 June 2017.