Timing your business buys to make the most of tax time

As the end of the financial year approaches, small businesses should be thinking about the claims they can make when they do their tax, to help reduce their tax liability.

This is particularly important if you’re thinking about making some new investments in your business, because getting the timing right could reduce this year’s tax bill.

We understand claims can be confusing, which is why we’ve wrapped up some of the ways you can save, below.

Instant asset write-off

The instant asset write-off is a government initiative that lets you claim an immediate deduction for the business portion of the cost of assets.

The write-off is available to small businesses who have an aggregated turnover  of less than $10 million. This applies to assets first used or installed ready to use between 12 March 2020 until 30 June 2021 providing the asset was purchased on or after 7:30pm (AEST) on 12 May 2015 and by 31 December 2020 (note there is a $150,000 limit on the deduction). This means any big purchases you make between now and tax time won’t be claimable under this scheme (don’t worry though, you’ve got other options we’ll get to later).

For your information, the instant asset write-off is set to change from 1 July 2023, thanks to the Federal Budget 2023/24. Here’s how.

Temporary Full Expensing

This is the final year Temporary Full Expensing (TFE) is available. Originally introduced in 2020 to help businesses recover from the impact of Covid-19 lockdowns, it allows you to claim an immediate deduction on the business cost of eligible new assets first held, first used or installed ready for use for a taxable purpose between 7.30pm AEDT on 6 October 2020 and 30 June 2023.

Under TFE, you can claim write-offs on new assets if your aggregated turnover is under $5 billion. To claim second-hand assets, however, your aggregated turnover must be less than $50 million.

According to the ATO, there’s no limit on the cost of eligible assets you can apply this to. Yet certain assets, like cars, may have specific limits. Keep in mind there are also some excluded assets, more info on that here.

If you’re thinking about investing in new equipment before tax time and want to make the most of TFE, make sure you seek proper tax advice before you start shopping.

So whip out those records and work out what you may be able to claim under the instant asset write-off scheme (if you haven’t already). You could save yourself some serious cash!

Need extra funds for new equipment?

The Tyro Business Loan gives you access to funds, fast.¹ Simple and flexible, our unsecured business loan has helped small businesses across Australia to buy equipment, hire new staff,  and manage cash flow – helping them propel their business forward.

Tyro customer Onboard Industries uses the Tyro Business Loan to purchase new surfboards from overseas to beef out its in-store collection.¹ “When our large production orders are needed, sometimes we don’t have the cash available to pay for the first-up deposit – which is quite large. Having access to a Tyro loan really helps,” said Manager Ellis Gerry.

Make tax time count

When preparing for tax time, it’s a good idea to chat with a professional. Getting expert advice can help you work out whether now is a good time to invest in new equipment for your business.

If it’s the right time to make an investment, use our small business loan calculator to see what your repayments would look like. Once you’re happy with your repayments schedule, check your eligibility in a matter of minutes via the Tyro App.¹

_Disclaimers

_{Tyro provides this article for general information and educational purposes and does not take into account the financial situation or needs of any reader. The information provided must not be relied upon as financial product advice. Taxation considerations are general and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information.}

_{1Tyro may undertake a credit check with a credit reporting agency when checking your eligibility for a Tyro loan. Tyro loans are subject to Tyro’s eligibility and credit criteria. A personal guarantee is required and loan repayments are subject to minimum repayment amounts. A Tyro Bank account is required. Other conditions may apply.}