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This is the second part in our series on the 2019/20 Federal Budget and what it means for you. Yesterday we looked at personal income tax cuts (hands up if you visited the tax relief calculator!) and today we will look at the impact of the announced budget on small business.

INSTANT ASSET WRITE-OFF (AKA TIME TO UPDATE THE EQUIPMENT)

The threshold for the popular $20,000 instant asset write-off has increased to $30,000, effective from 2 April 2019 until 30 June 2020 when it will potentially return to its original $1,000 level (we say ‘potentially’ because the threshold has been at or above $20,000 since 12 May 2015).

In addition, the number of businesses that can access the instant asset write-off will increase. Currently, to qualify for the write-off, only businesses with an aggregated turnover under $10 million qualify. From Budget night, businesses with an aggregated turnover under $50 million will also be able to access the write-off.

Instant asset write-off thresholds Small Business* Medium business**
1 July 2018 – 28 January 2019 $20,000
29 January – 2 April $25,000
2 April – 30 June 2020 $30,000 $30,000

* aggregated turnover under $10 million

** aggregated turnover under $50 million

Assets will need to be used or installed ready for use from Budget night until by 30 June 2020 to qualify for the higher threshold. Anything previously purchased does not qualify for the higher rate but may qualify for the $20,000 or $25,000 threshold. Similarly, anything purchased but not installed ready for use by 30 June 2020 will not qualify, nor do assets leased to another party on a depreciating asset lease. The instant asset write-off only applies to certain depreciable assets including:

  • horticultural plants
  • capital works (building construction costs etc.)

For assets costing $30,000 or more

For small businesses (aggregated turnover under $10m), assets costing $30,000 or more can be allocated to a pool and depreciated at a rate of 15% in the first year and 30% for each year thereafter. If the closing balance of the pool, adjusted for current year depreciation deductions (i.e., these are added back), is less than $30,000 at the end of the income year, then the remaining pool balance can be written off as well.

NON-COMPLIANCE CHANGES

From 1 July 2021, Australian Business Number (ABN) holders will be stripped of their ABNs if they fail to lodge their income tax return. In addition, from 1 July 2022, ABN holders will be required to annually confirm the accuracy of their details on the Australian Business Register.

Currently, ABN holders are able to retain their ABN regardless of whether they are meeting their income tax return lodgement obligations or the obligation to update their ABN details.

SUPPORT IN TAX DISPUTES

This previously announced measure provides $57m in funding over five years to provide access to a fast, low cost, independent review mechanism for small businesses in dispute with the ATO. The funding is directed to the Department of Jobs and Small Business, the Administrative Appeals Tribunal (AAT) and the Australian Taxation Office (ATO).