The recent Federal budget saw the introduction of the $20,000 depreciation allowance for small businesses. What this means is that, if your business has aggregated turnover of less than $2m and you purchase a capital item worth up to $20,000 that you can depreciate the full amount in that tax year, rather than over its effective tax life as you normally would.
This means that your business could deduct the whole value of the asset in that year, lowering your company’s taxable income.
Naturally, many businesses are looking at cars as a capital item that could be used in this instance, so it could be a great boost for the car industry. Here are some things you need to know:
- The asset must be used or installed between 12/05/2015 and 30/06/2017
- The total cost of the asset must not exclude $20,000
- Horticultural plants and in-house software items are excluded
- Second hand assets are included
If you are thinking of taking advantage of this for your company vehicles under finance (or any item under finance) then only specific types of finance, such as a Chattel Mortgage, can allow you to finance the asset whilst taking advantage of the new rules.
For more information on the legislative changes (including more detail on what is included and excluded) see the ATO website here.
For more information on how to finance the cost and take advantage of the change contact StreetFleet today.