To help understand the ramification of what this $20,000 small business tax breaks means, i have outlined a concise summary of key criterias:

  1. Small business is defined as businesses with an aggregated turnover of less than $2,000,000 ($2 million).
  2. The asset purchased MUST cost less than $20,000, meaning you can only claim this tax break if the asset cost $19,999.99 or less. Any asset costing more than $19,999.99 will not fall under this tax break.
  3. Commencement date for this tax break will apply from 12 May 2015 at 730pm and will expire on 30 June 2017. Therefore this does not last forever!
  4. Small business pool can be written off immediately if the balance is less than $20,000.
  5. Some excluded assets include horticultural plants and In-house software allocated to a software development pool.
  6. Tax deduction is only available in the year the asset is first used or installed ready to use and the extent that the asset is used for an income-producing purpose.
  7. Both new and/or second-hand assets are counted under this tax break.
  8. Vehicles purchased must cost less than $20,000 to enjoy this tax break. Be wary of working out this purchase price when you are negotiating with a dealer! Second-hand vehicles enjoy this tax break as well.
  9. Software purchased off the shelf or developing software costing less than $20,000 can be claimed under this tax break.
  10. GST-registered entities can claim the gst-exclusive amount of the asset and non-gst registered entities can claim the gst-inclusive amount of the asset.
  11. As at the point of writing this blog, the law to give effect to these changes have not being enacted. Information about this can be further found on the ATO website.

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