Small businesses maximise the instant asset write-off to claim a tax deduction for the cost of an asset.
A tax deduction is an amount of money subtracted from your taxable income. Your tax rate is calculated based on this calculation.
When you sell products or services, the sum of those sales becomes your taxable income. Many rules exist about deductions that you can claim in Australia. It is always best to consult a registered tax agent to make your tax return.
An asset is something that you own and use repeatedly in your business. It is valuable as it helps you achieve your current and future income. When accountants list your assets, the sum of that list is displayed in an asset register and totalled in your Balance Sheet. The Balance sheet shows how much you own and owe at a given time.
In Australia, the tax system has an instant asset write-off section. Your business can use the instant asset write-off for multiple assets if each cost is less than the limit. Assets can be new or second-hand.
The limit looks at the cost of the asset, not the percentage of business use. Exclusions also apply.
Assets work hard for you. Your accountant can match their use to future income or, if eligible, write off in a single year. Connect the dots and benefits of asset management because it provides a systematic approach to monitor all assets to run smoothly.
We hope you’re enjoying our Illum jottings, just a note though. The information provided here is intended for general informational and educational purposes only. While we aim for accuracy, we can’t guarantee that this content will apply to your specific situation—everyone’s circumstances are unique.
Illum’s is not a substitute for personalized advice from a qualified accountant, tax advisor, or any other professional. If you have questions specific to your individual circumstances, we strongly recommend consulting a professional for tailored advice.