Some practices keen on expanding their operations are sometimes held back by the potential consequences on their cash flow. The addition of much-needed equipment must be carefully weighed and considered, taking into account how the purchase of these can affect the practice's liquidity over the short and long term.
In order to take advantage of this measure introduced in the 2015 Federal Budget, small businesses will need to pool assets which cost $20,000 or more and then depreciate these at a rate of 15 percent in the first year and 30 percent in the following year.
The scheme will be available for small businesses until June 30, 2017.
What are depreciating assets that are included under this scheme?
The term depreciating asset refers to assets that have a limited effective life and are expected to decline in value over a given time frame. These assets may include plant and equipment, office furniture and fittings, work vehicles, tools and machinery. Not included are land, some types of computer software, intangible assets, and items of trading stock.
Practices that are keen on taking advantage of this opportunity are encouraged to consult with their legal and accounting teams. Businesses and practices that can immensely benefit from this opportunity are those who have been planning on making purchases for quite some time.
Small businesses should be aware that this opportunity is a tax deduction and not a grant or allowance. And if the business is not making a good profit, it cannot take full advantage of the tax deduction.
Experts also warn that for practices that have not yet been registered for GST, the deduction includes the GST and can push practices over the $20,000 threshold. Finally, if the asset purchased will be partly for personal use, the asset can be added to the GST component which can also push the practice over the said threshold.
PS: Keep an out eye out for e-mail two of this series. We will share the thoughts gleaned from our interview with a specialist Accountant, who provides services to business owners within the medical profession
SHARE THIS:Disclaimer AMA Medical Products has made every attempt to ensure the accuracy and reliability of the information provided. The material found within this blog article made available by AMA Medical Products is for educational purposes only and to give general information and understanding of the topic. The content should not be used as competent or substitute accounting, taxation or business advice that would be acquired from a licensed professional service provider.
AMA Medical Products is a market leading supplier and distributor of high quality medical products.
If knowledge, experience, high level technical support, outstanding customer service and delivery of a tailored solution to best meet your needs are what you demand of your medical products supplier, then our team at AMA Medical Products will be happy to exceed your expectations.