Are you thinking of buying fixed assets in the next month?
Last year, as a result of the economic hit businesses were taking, the government introduced a temporary change to the low-value asset threshold for depreciation from $500 to $5,000.
This change means you are allowed to deduct the full cost of your business assets with a value of less than $5,000 in the year you purchase them. This is instead of having to spread the cost over the life of the asset.
This increase in the threshold will end on 16 March 2021.
For assets purchased on or after 17 March 2021, this threshold will be permanently increased from $500 to $1,000.
So if you are considering purchasing equipment, or other assets for your business and the purchase cost will be between $1,000 and $5,000, then you should seriously consider making the purchase before 16 March 2021. That way, you can offset the costs of such assets against this year’s profit – and potentially reduce your tax bill!