As tax lodgement approaches, it’s essential for business owners to be aware of key changes in the 2023-24 tax return that can positively impact their finances through reduced tax liabilities. Specifically tailored for small businesses, there are two notable incentives available for costs incurred during the 2023-24 income year: the small business instant asset write-off and the small business energy incentive.
Small Business Instant Asset Write-Off
Small businesses with an aggregated annual turnover of less than $10 million can benefit from the small business instant asset write-off. This initiative allows eligible entities to deduct the full cost of depreciating assets valued at less than $20,000, which are first used or installed for taxable purposes between 1 July 2023 and 30 June 2024.
Key features of this incentive include:
- The $20,000 threshold applies per asset, enabling multiple assets to be written off if they meet eligibility criteria.
- Costs associated with improving eligible assets can also be immediately deducted.
- There is a proposed Bill to extend the $20,000 instant asset write-off until 30 June 2025, pending approval.
Small Business Energy Incentive
For businesses with an aggregated annual turnover of less than $50 million, the small business energy incentive offers a valuable tax deduction of 20% for new assets or improvements that enhance energy efficiency. Eligible assets must be first used or installed between 1 July 2023 and 30 June 2024.
Important details to consider:
- A maximum deduction of $20,000 per business applies under this incentive, with total expenditure capped at $100,000.
- Not all expenditures are deductible, including those related to assets using fossil fuels, solar panels, capital works, motor vehicles, software development pools, and financing costs.
Digital Games Tax Offset (DGTO)
In addition to these small business-specific incentives, Australian companies of all sizes may benefit from the Digital Games Tax Offset (DGTO). This refundable tax offset allows eligible companies involved in digital game development in Australia to claim 30% of their qualifying Australian development expenditure incurred from 1 July 2022 onwards. There is a cap of $20 million per company, per income year, and companies must obtain certificates from the Minister of the Arts to qualify.
These incentives are designed to support small businesses and companies across Australia in managing their tax obligations effectively. For further information or assistance, please feel free to contact us.
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