Last Chance to Claim Instant Write-Off Tax Deductions
Small business that buy an asset that cost less than $6,500, are able to claim the full amount as a tax deduction, if purchased prior to 31 December 2013.
After that date, amounts up to $1,000 are an immediate tax deduction, with higher amounts depreciated and the deduction claimed over a number of years.
For motor vehicles, if purchased and received prior to 31 December, the first $5,000 is an immediate tax deduction, with the excess depreciated. After that date the full amount is depreciated over a number of years less your personal use.
The above changes are a part of the Liberals abolishing the Mining Tax. The legislation is before Parliament, however it is expected to be passed in February next year.
What Should I Do?
Unlike the previous generous investment tax breaks which gave business additional depreciation deductions when they purchased cars, these rules are only a timing issue, as they bring forward depreciation claims.
For cashflow purposes, it always helps to claim tax deductions earlier than later. However, in the long term you will receive the same tax deductions. If you were planning to buy assets early next year, it would be a good idea to bring it forward before 31 December.