An instant asset write-off allows small businesses (with an annual turnover of less than $500 million) to claim immediate deductions up to an amount of $150,000 for new or second-hand plant and equipment asset purchases. The assets must first be used, or installed for use, in the income year you’re claiming for. The amount you can write-off will depend on when the asset was purchased and the associated threshold amount.

CLAIMING DEPRECIATION OF BUSINESS ASSETS

When businesses buy fixed assets, tax deductions are generally not available immediately (except in special conditions like the instant asset write-off). Rather, the cost of the asset is claimed over time, reflecting its decline in value. This is commonly referred to as tax depreciation. Tax depreciation is complex and different rules can apply, depending on the type of asset and its use. In addition, certain small business entities may also elect to use the simplified depreciation rules to work out their tax depreciation claim.

PREPAID EXPENSES

You may be able to claim some running expenses as tax deductions – including ones you pay for ahead of time.

Prepaid expenses before 30 June can increase your allowable deductions for the financial year. Eligible expenses include those that have a service period of 12 months or less. If you claim them this year, you won’t be able to claim them next year meaning you may have more tax to pay next year.

BUSINESS ACCOUNT AND LOAN EXPENSES

You should also consider whether you can claim the fees and interest from your business accounts and loans around tax time.

DEDUCTIONS FOR PERSONAL SUPER CONTRIBUTIONS

If you’ve made or are making an after-tax contribution into your super, you may be able to claim a tax deduction at tax time.

When claiming a personal superannuation deduction for the 2019/20 financial year, it’s important to remember that the combined total of your superannuation guarantee payments, salary sacrificed amounts and your personal tax-deductible contributions can’t exceed $25,000 in a financial year or extra tax will apply.

OTHER DEDUCTIONS

If you have you been recently working at home due to the coronavirus, you may be entitled to claim tax deductions for expenses related to generating your income. There are a number of criteria to consider before claiming an amount in your tax return.