ABN does not mean eligibility for $20k asset write-off
Despite the general support for the $20,000 asset write-off for small businesses announced in the Federal Budget tax advice should be sought before making big purchases, an accounting body has warned.
The Institute of Public Accountants (IPA) said although retailers are on the bandwagon and are promoting sales to take advantage of the good news it is not their job to be advising on tax benefits or tax implications.
"Having an ABN does not mean you are automatically eligible. There are complex tax rules to consider such as Personal Services Regime and non-commercial losses which could cause deductions to be denied," IPA general manager for technical policy, Tony Greco, said.
"If a business is not making a profit, there is no advantage in purchasing assets it cannot afford. The write-off only applies as a deduction. It is not a cash-in-the-hand and the IPA is urging people to seek advice from their trusted adviser."
Greco warned there are excluded assets that are not eligible and issues surrounding if someone is running a business that satisfies existing tax rules.
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