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The Institute of Public Accountants (IPA) has warned businesses to seek professional tax advice before making any significant purchases following the federal Budget announcement of a $20,000 asset write-off for small businesses.
IPA issues warning about new asset write-off measure
25 May 2015
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6 minute read
IPA general manager, technical policy, Tony Greco warned that some retailers will try to take advantage of the initiative but said businesses should seek advice before buying anything.
“Retailers are well and truly on the bandwagon, with many promoting sales to take advantage of the good news, and that is in the true spirit of the policy intent,” Mr Greco said.
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“However, it is not the retailer’s job to be advising on tax benefits or tax implications. Small businesses should talk to their accountant and obtain appropriate tax advice before going on a spending spree."
Mr Greco said the new measure will not be useful for all businesses. If a business is not making a profit, there is no advantage in purchasing assets it cannot afford, he said.
“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”.
Mr Greco also warned businesses that some assets may not actually be eligible for the the write-off under the new rules.
“Having just 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.
“We urge taxpayers in doubt to seek advice and not rely on misinformation in the marketplace," Mr Greco said.
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