Have you been considering upgrading your business' equipment or undertaking some energy efficiency upgrades? The Federal Government accelerated depreciation for small businesses initiative is an excellent opportunity to save money on equipment upgrades, realise your energy effcicency potential and help your small business long-term. The initative has now been extended until 30 June, 2018.
About the initiative
Your business is considered a small business if you have an aggregated turnover of less than:
• $10 million from 1 July 2016 onwards
• $2 million for previous income years.
Under the instant asset write off option, assets costing less than the instant asset write-off threshold of $20,000 can be written off in the year they are bought and used, or installed ready-for-use. This applies irrespective of whether the asset is purchased new or second-hand. It is possible to use this $20,000 option multiple times, however, the cost of each item must be under the
threshold. Assets that cost $20,000 or more are deducted over time using the general small business pool option. Under the pooling mechanism a deduction for 15 per cent of the cost is allowed in the first income year and a 30 per cent deduction each year after the first year. When the balance of your small business pool is less than $20,000, you can write-off the entire balance at the end of that income year.
Energy efficiency makes sense
It makes sense for businesses to be energy efficient. As well as reducing your businesses energy costs, greater energy efficiency can increase profitability and competitiveness, improve product quality and output, reduce risks and liabilities, enhance resilience and enable new business opportunities. It has been estimated that many small businesses can cost effectively save 30 percent of their energy demand. Much of this saving can be achieved through simple operational changes – such as turning off equipment and appliances when not needed – and better maintenance and settings at little or no cost.
And investing in relatively low cost improvements – such as sensors, automation, variable speed drives and other energy efficiency and renewable energy technology – can help your business realise its full energy saving potential.
More money back to your small business
By taking advantage of the accelerated depreciation for small businesses initiative when costing and implementing your energy saving projects, your tax savings can be added to the energy cost savings, amplifying the financial benefits and getting more money back to your small business.
Find out more and get support from the Australian Tax office.
And don't forget to get advice from your trusted financial adviser before making your purchase to ensure both you and your small business will benefit.