Study finds small business owners are missing out on tax deductions

• 74 per cent of small business owners have heard of the instant asset write off
• Less than half of those aware of the $30K instant asset write off have actually take advantage of it
• The highest amount of claims include computers (56 per cent), vehicles (33 per cent), tools (23 per cent), office furniture (21 per cent)

A national study has found small business owners are failing to take advantage of the instant asset write off and are missing out on potential deductions.

The survey by Officeworks and H&R Block has revealed 84 per cent of Australian small business owners have yet to claim the instant asset write off despite two thirds of those surveyed suggesting they would like to reduce their tax bill. In fact not only are small business owners not making use of the write-off, less than half of those surveyed were aware of the scheme. Of those who had heard of the instant asset write-off, only one in four knew that the threshold had recently increased to $30,000.

There was also little understanding of what assets could be claimed under the scheme nor knowledge that the write-off could be claimed multiple times. The instant asset tax write-off has been available to small businesses for the past few years and enables them to instantly deduct assets instead of claiming deductions over a number of years.

Officeworks tech spokesperson, Sandy Young, said although business owners rate growth as a top priority, very few new the opportunities the end of financial year could bring.

“The survey told us that 70 per cent of small business owners engage an accountant to help prepare their tax return, so we’d encourage them to ask about the incentives available, including making the most of tax-deductible products and purchases,” Young said.

Mark Chapman, Director of Tax Communication at H&R Block said EOFY is a time both to get the books and records up to date and also to undertake any last-minute tax planning.

If you’re planning to give a small business a boost, the instant asset write-off is a great way to tax effectively fund the expansion and efficiency of the business and, at the same time, reduce taxable profits.

“So, any small or medium business that’s looking to improve productivity, efficiency and profitability can now lock in an immediate tax deduction for items as diverse as laptops, office furniture, stationery, cars and coffee machines,” he said.

Chapman said in order to claim a deduction this year, make sure any invoices that can be paid this month are paid, consider deferring any large invoices to customers until 1 July and ensure all Superannuation guarantee payments on behalf of staff are not just paid but have cleared the bank by 30 June.

Mark’s top tips for small business owners wanting to take advantage of the instant asset write off

Amongst the top assets that many small businesses are looking to use the tax break to acquire are the following:

Computers, laptops and other IT equipment

By far the best-seller for small businesses using the instant asset write-off, investment in new IT infrastructure is a no-brainer for many businesses looking to tax effectively fund growth.

Too many businesses rely on old, slow and unreliable computing equipment that reduces productivity as staff deal with delays caused by screens freezing and machines breaking down. So, it makes perfect sense to get an immediate deduction for the cost of new IT kit.

Motor vehicles

The ability to immediately deduct the cost of new motor vehicles has always been one of the most attractive features of the instant asset write-off. Now, with the threshold rising to $30,000 per asset, the range of new and second vehicles that could qualify for a deduction has increased greatly. So, whether your client is a trader looking for a better ute, an Uber driver looking for a nippy run-around or a delivery driver looking for a new van, the instant asset write off could deliver a tax effective boost to business.

Office equipment

Items such as office chairs, desks, cabinets and shelves could qualify for the write-off but don’t be afraid to think outside the box. If the office canteen needs a new coffee machine, that will qualify. So will a new sofa and TV set for the office reception or the staff break-out room. If meeting rooms need jazzing up, think about buying some new paintings or sculptures.

Boost retail premises

The instant asset write-off is great for tax effectively building a retail environment that will wow your customers.  Amongst the items you could look at claiming are the following:

Cash registers and other POS devices

Delivery vans

Store fittings and fixtures

Computers, laptops and tablets

In-store security systems

Tools of your trade

Whether you’re a plumber, electrician or carpenter, if tools are needed to undertake your job, an immediate tax deduction for the cost of upgrading could be available..

It’s not just tradies who can benefit. For example, if you’re a dentist you could invest in a new dentist’s chair for patients or new x-ray equipment. Opticians can upgrade to the latest eye-testing kit. Provided the cost of each item is less than $30,000, it’s claimable in full, this year.