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What is the $20,000 small business tax break?

What does the small business tax break mean?

If you own a small business with an annual turnover under $10 million, you can claim an immediate tax deduction for selected business-related purchases under $20,000.

There is no limit to the number of eligible purchases you can make.

Small businesses can already claim immediate deductions for depreciating assets under $1,000. This measure temporarily increases that threshold to $20,000 per asset, purchased between 12 May 2015 and 30 June 2018.

Who's eligible for the tax break?

Any small business is eligible for the tax deduction, provided it has an aggregated turnover of less than $10 million

What can be purchased?

Generally, anything 'physical' used for running your business: office furniture, printers, computers, cars and the like.  The items don't have to be brand new either.

There are no limits to the number of sub-$20,000 purchases.

What can't be purchased?

In-house software which has been allocated to a software development pool, horticultural plants, capital works and research and development costs, are examples of some excluded assets from the new scheme. For full details on the excluded assets see the Australian Tax Office.

How long does the tax break last?

The new accelerated depreciation rules commenced 7.30pm (AEST) 12 May 2015 and will apply until 30 June 2018. It is scheduled to revert back to the original $1,000 threshold there after.

What if a purchase is more than $20,000?

All items over $20,000 can be joined together and depreciated under the existing arrangements; 15% in the first income year, with a diminishing value rate of 30% each income year after that. If the value of the total pool of assets drops below $20,000 at the end of an income year that ends after 12 May 2015 and on or before 30 June 2018, it can be claimed immediately.

Things you should know

This content of this page is of a general nature and is not to be taken as professional advice. Westpac recommends that you seek your own tax and financial advice to see if these suggestions suit your needs.

This information does not take your personal objectives, circumstances or needs into account. Consider its appropriateness to these factors before acting on it.

Unless otherwise specified, the products and services described on this website are available only in Australia from Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714.