Instant Asset Write-off ending June 30, 2023 (under Temporary Full Expensing).
As another financial year draws to a close, it’s a busy time for any business. But it’s also a good time to reserve a spot in your (ACURA) diary and pause to evaluate. Look at the bigger picture. How has the business been going? How can we maximise return for the business? What are the biggest challenges? Looking at our industry, some of the big topics still are rising material cost, supply chain and workforce.
Instant Asset write-off ending June 30, 2023 (under Temporary Full Expensing).
In addition to the broader business-focused questions mentioned above, this time of the year is also a race to the finish line or the financial bottom line. Something that has been a big financial draw-card for eligible businesses in the past few years, the Instant Asset write-off, is ending for most companies at the end of June 2023. The ability to write-off the full expense of an asset this financial year rather than depreciating it over a number of years, can significantly reduce your business income and lower the tax for your business to pay. This decreases the “true investment cost” of qualifying assets, such as tools or equipment, and it might pay off to bring forward an investment you would have otherwise looked at a year down the track. Simply because buying it this financial year might save you a lot of dollars.
But how much could your business save?
This will have to be answered on a case-by-case scenario as there are a range of factors determining this. We have created a sample case study to demonstrate what it looks like for Construction Business ABC.
Case Study: How does Construction Business ABC save $1,250^ in tax?
We have created a sample scenario to showcase how much a business could save in tax when buying tools or an Armorgard Cutting Station purely for the purpose of demonstrating the scale of this tax benefit which is running out soon. The Construction Business ABC Solutions has an aggregated turnover of $8,000,000 for the ‘22-23 income year. They do not use the simplified depreciation rules. The business purchases a new Armorgard Cutting Station and some tools at a hypothetical cost of $5,000 before 30th June 2023 and immediately uses it wholly for business purposes. Using the Instant Asset Write-off (Temporary Full Expensing), the business can deduct the cost in the ‘22-23 income year. Their income will reduce by $5,000 and the tax saved would be $1,250^ (at 25% company tax rate).
If you need supporters in the race to the finish line, our team is here to help. Whether it’s advice on parts or equipment, technical advice or help in finding a customised solution for a challenge you have, we’re ready!
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Disclaimer:
*Offers valid until 30th June 2023. Pricing quoted excluding Gst and freight charges. Free vice and YETI Tumbler with any purchase of Armorgard Tuffbench (39AGBH1270M). Colours may vary.
Free Weber Baby Q with any purchase of Armorgard Site Station (39AGSS2).
Free Cold Cut Saw and free Weber Baby Q with any purchase of Armorgard Cutting Station (39AGSS7). Colours may vary. While stocks last. One per customer account.
While stocks last. One per customer account.
^ All information provided in this example is of a general nature and for illustration purposes only. It is not personal financial or investment advice. It does not take into account your particular objectives and circumstances. No person or business should act on the basis of this information without first obtaining and following the advice of a suitably qualified professional advisor. Underlying assumptions of this calculation: Construction Business ABC has an aggregated turnover of $8,000,000 for the 2022-23 income year. The business purchases new tools and Armorgard Cutting Station for the hypothetical cost of $5,000 before 30th June 2023 and immediately uses it wholly for business purposes. In this instance Construction Business ABC can deduct the cost of investment in the 2022-23 income year, using the Temporary Full Expensing Method (eligible businesses only and the business does not use the simplified depreciation rules). The income will be reduced by $5,000 and the tax saved would be $1,250 at a company tax rate of 25%. For details, visit www.ato.gov.au.