Tax Deductions: Purchase A Desky Office Desk As A Business Asset
Post-COVID-19, as part of the 2020-2021 Federal Budget, the Australian Government announced a further 6-month tax extension that could save small businesses thousands of dollars in tax write-offs.
The changes from the budget extended the instant asset write off eligibility period from when an asset is first used or installed ready for use between 12 March 2020 and 31 December 2020 - it has extended the 'use and install period' by giving businesses an extra six months, until 30 June 2021, to first use and install those assets. But under the instant asset write off scheme the asset must still have be purchased by 31 December 2020 and applies to businesses with aggregate annual turnover of less than $500 million and the amount is only up to $150,000.
The new temporary full expensing measure is different. The TFE measure expands the scope to allow larger businesses to benefit from instant write off measures and takes over going into the next few years - the larger scope means that businesses with an annual turnover of less than $5 billion will be able to deduct the full cost (not capped at $150,000) of eligible capital assets acquired between 6 October 2020 and first used or installed by 30 June 2022.
This will be welcome news for many Australian SMEs that want to upgrade assets and take advantage of the tax deduction benefits in the current tax year.
Instant Asset Write-Off Scheme Extended Until June 2022
This instant asset write-off scheme enables you to write off the entire amount of asset purchases in the financial year they were purchased. In the past, a business purchasing an asset could only write off a portion of an asset expense over several years. By deducting the full expense in a single year, you can decrease your taxable income and the tax you owe. This takes into account the impending easing of COVID-19 restrictions and the uplift in the economy, since businesses will need to invest in equipment to boost productivity to meet increasing demand.
With the instant asset write-off changes in 2021, you can claim a deduction on your tax return for the full cost of items such as tools and machinery, IT hardware, kitchen equipment and office furniture.
So, if there was ever a time to invest in standing desks, ergonomic chairs or sit stand stools in order to not only increase productivity but also to ensure your staff’s continued well-being at this difficult time, then that time is now!
If, up until now, you have always held back on upgrading your workspace because the delay in cash flow between purchasing the asset and receiving the tax benefit can take years, then taking immediate advantage of the instant write-off initiative is a no-brainer; purchase an asset for business use and you do not have to wait and claim the costs back over time.
Use Tax Deductions To Invest In Office Equipment
The increase in the instant write-off initiative will greatly improve cash flow for Australia’s small business owners but business owners need to understand how the deduction process works and what smart purchases to make to benefit their company as they budget for 2021.
Let us look at a potential example of how the extended instant asset write-off works.
John runs a small office. His team of 4 have been working from home during lockdown. Things may be a bit strange with everyone working back in the office, so he wants to create a healthy, positive environment so they all feel comfortable.
He buys 4 new Desky Single Sit Stand Desks from the Desky range, totalling $2,716 exclusive of GST. Joan’s back aches if she sits for too long, so he buys a Desky Ergonomic Medium Mesh Chair ($279). The others prefer to work standing up, so he invests in 3 Desky Sit Stand Active Stools (total $567).
Having spent a total of $3562, at the small business company tax rate of 27.5 per cent, John will reduce his tax bill by $979 as a result of the purchase.
Every cloud has a silver lining, and Australians’ opportunity to save money, receive deductions on taxes, and increase the productivity of their business is this year’s silver lining.
Standing Desks Benefit Office Productivity
Supporting staff with alternative working stations and programs is recommended as a practical investment for the workspace; increasing not only staff welfare but also productivity which will help the company grow and ultimately benefit from the write-off.
With productivity and the well-being of your employees uppermost in your mind, the introduction of ergonomic seating, height-adjustable standing desks and proactive stools could go a long way in helping your business prosper post-pandemic. Yes, a standing desk is a major investment, but could it ultimately increase the productivity of your SME?
Purchase Your Desk Before June As Part Of The Instant Asset Write-Off Scheme
Before the Instant Asset Write-Off scheme, it was much more difficult to receive taxes back from write-offs over the amount of $1000. But a deduction on a standing desk purchase is now considered within the current instant asset write-off scheme, if purchased before the end of June.
Standing desks are proven to increase the productivity and health of employees of small business owners. Business owners are urged to take advantage of the government’s write-off extension by upgrading their workspaces with ergonomic furniture such as Desky's office desks and ergonomic office chairs before June 30th.
A desk from Desky could be the perfect purchase for your new office fitout. It makes business sense to order yours before the deadline!
Ready to pick your new sit stand desk? See the Desk Buying Guide we made to help you select the best desk for your office.
Please Note: This article is general in nature and should not be taken as financial/tax advice - please contact your accountant to see what your business is eligible for.