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Make the Most Out of the $20,000 Small Business Tax Break

One of the welcome announcements during the Federal Budget 2017 was the extension of the $20,000 instant asset write-off into the 2017-18 financial year, a big boon for small businesses throughout the country.

With it, small businesses with a turnover of less than $10 million can instantly write-off business related purchases that are under $20,000. Eligible purchases include tools, equipment, vehicles, etc., with very few restrictions.

Given that there aren’t many things that cost over $20k, and you’re not limited to just one purchase, how can your business make the most out of this tax break?

Before you go on a spending spree

Note that just because you can write-off 100% of eligible expenses doesn’t make this ‘free money’ – it’s simply a tax relief.

More importantly, the funds you can spend aren’t unlimited. You still have to ensure that you only buy what your business really needs. Having a prioritised list of such items will make your expenditures much easier.

The best way to take advantage of the tax break is to buy those things you’ve been meaning to buy but always had to put off for other, more immediate ones.

What you should consider buying

Here are a few ideas if you’re looking to make full use of the small business tax break:

Office decor and furniture

Businesses that entertain customers and clients in a physical location will benefit a lot from making their place of business pleasing and welcoming. It’s one way of making a good first impression that can leave lasting effects about how they perceive the quality of your services.

A nice-looking office also improves the mood and productivity of your own crew, so go ahead and add a little glitter and glam to your space.

Computers and related equipment

Investing in good computers for your business will always be a worthy investment. It’s totally up to you how high a budget you wish to set, as this is a big discussion altogether, but making sure your crew can perform their work faster and more efficiently is just pure value.

One thing to remember though – the tax break does not cover software developed in-house. It’s a pretty narrow restriction but it’s important to know nonetheless.

Second-hand vehicle

That’s right, the tax break covers second-hand goods. While you’d be hard-pressed to find a brand new vehicle within the $20k limit, you can definitely find decent second-hand ones.

Businesses that need vehicles in their operations should heavily consider whether a new car, van, truck, etc., would have a positive return in the immediate future. If so, time to get a (semi) new ride!


Tradies who run their own business know just how expensive good tools are. Consider this a great time to add to or upgrade your toolbox.

Again, this is an investment that allows you to offer better services or else speed them up considerably, so take advantage of being able to buy improvements without feeling guilty about spending.

Taking advantage of the tax break

If you’re running your own small enterprise, you know how valuable write-offs really are. Make a shopping list of the things your business needs and prioritise buying those that would have the biggest impact or help you achieve your business goals.

Finally, note that the following items are ineligible for the tax break: capital works, assets already allocated to low-value pools, assets leased out more than 50% of the time on a depreciated asset lease, horticultural plants and in-house developed software.

If you need further help on your tax obligations as a small business, feel free to contact us and we’d be glad to assist however we can.

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