Feedback from most people, when it comes to the Scheme, is the same : “When the $20,000 tax break came out I knew it could be useful, but without a background in accounting I wasn’t sure whether it would be relevant to us. I did a fair bit of reading and it still wasn’t clear which assets would qualify”.
For most small business owners, while many are very well educated and understand at a high level of what qualifies under the scheme, they don’t know everything and this highlights that most have a gap in their knowledge of core business practices like accounting, marketing, legal, tax etc.
That’s a lot of missed opportunities!
Also the government has announced they will increase the write off from $20,000 to $25,000 and the date will be extended to 30 June 2020. This has not been legislated as yet however it does not have any opposition and it is believed it is will go through.
Claiming website costs
If you incur expenses creating or maintaining a website for your business, you may be able to claim the costs as a deduction.
You can depreciate the costs of a website over time. You do this by various depreciation methods, including putting the expenses into a pool. (ATO 2019)
Mark Chapman, director of tax communication at H&R Block, SMH 2017, says a lot of businesses are not fully aware of what they can claim. Some don’t even know the tax break exists.
“There’s a big knowledge gap in terms of what people understand about the tax break and what they can claim,” he says.
Chapman says when it comes to claiming expenses such as a website, some parts are considered capital assets and can be written off under the $20,000 tax break. Other elements may be written off straightaway as revenue costs.
“If you’re buying computer equipment and servers, or adding features like online shopping facilities or software that will give your business an ongoing benefit, these are usually regarded as capital expenditure and would be potentially eligible for the write-off,” he says.
As to what you can claim under the $20,000 immediate tax write-off, the first thing to remember is the purchase has to cost $20,000 or less, exclusive of GST.
If you have upcoming business expenses, now might be a good time to make the purchase so you can make the deduction in the current financial year.
But remember don’t just buy something for the sake of it – the purchase needs to add value to your business for it to make financial sense.
** Please seek independent advice from your tax accountant or other specialist. The information provided here is general in nature and not suitable for all businesses.