On the 2nd of April 2019, the Federal Treasurer – Josh Frydenberg announced among other things, “additional tax relief for 3 million small sized businesses”.
One of the most common small-medium sized business set-ups in Australia is that of the local hotel or pub – we know that every town has one and the Treasurer said during his budget speech, that “small businesses are the engine room of our economy.” Frydenburg added that “they are integral to every local community” and this couldn’t be more true than in the case of the local watering hole.
The additional tax relief offered has come in the form of an extension of the existing “instant asset write-off scheme” which from the 2nd of April has been increased and expanded.
Now, small to medium-sized businesses with a turnover of less than $50 million (increased from $10 million) can write-off a purchased asset worth less than $30,000 (increased from $25,000) in their tax return that year.
The scheme is particularly valuable to businesses in the hospitality industry which can be capital intensive and requires the purchase of machinery and equipment.
Frydenburg again, highlights the benefits to the industry specifically in his budget announcement stating that the increase will allow “a cafe to get a new fridge or grill”. Likewise, a pub can purchase a new fridge, a new beer dispensing system or gaming machine and immediately write it off in that tax year.
CEO of the Australian Chamber of Commerce and Industry, James Pearson also sees the benefits of changes stating in a recent media release that “Expanding the size and accessibility of the scheme encourages more businesses to invest in productive equipment and technology and create more productive jobs.”
Pearson goes further to say that “the higher threshold (up from the previous $20,000 to $30,000) and expansion of the write-off available to businesses with turnover up to $50 million (up from $10 million) are strong responses to our lobbying. And what is powerful is that the write-off is available for multiple assets as long as each one is under $30,000 value – not just the purchase of one asset each year.”
To ensure that all capital purchases (including building and asset acquisitions) are accurately and effectively reported for instant write-off or depreciation, we recommend the engagement of a professional quantity surveyor.
Capital Claims Tax Depreciation are quantity surveyors and commercial depreciation specialists. For more information about claiming capital allowance and depreciation for hotels, including case-studies and eBooks, see our hotels page here.