There were a few exciting incentives proposed for small business in the Federal Budget released on 12 May 2015.
The most significant proposal relates to the $20,000 tax break on the purchase of equipment. If you are a registered small business with an annual turnover of under $2 million, you can claim immediate tax deductions for purchases of $20,000 and under.
Assuming the legislation is passed, this scheme comes into effect retrospectively from 7:30pm on budget night (12 May 2015) and ends 30 June 2017.
We will keep you posted about when, or if, this proposed incentive becomes law.
Tax deductions and your startup
As part of our ongoing support for the Startup community, we blog (and vlog) every second month for Microsoft BizSpark as part of our #nudgemoments initiative. #nudgemoments is all about giving startups the opportunity to ask a finance question and get an answer that helps them grow their startup and make better business decisions.
The #nudgemoments StartUp Question for January was: I’m spending a lot of money on my startup. I’m not sure what I can claim for tax? Please help!
So in response to this question, Emma from Nudge Accounting broke it down into some manageable bits:
1. Running expenses
Common expenses such as advertising and marketing, office rent, travel, phone and internet along with accounting fees are all generally considered as tax deductions for your startup.
2. Equipment and other asset expenses
When you buy something for your startup such as new office furniture or a new laptop, these generally cannot be considered as a tax deduction straight away but must be spread over several years. This is designed to you match the tax deduction to the life of the asset. There are new rules from the ATO in place that mean you can claim an immediate tax deductions for items purchased below $1,000 in value.