Tax Deductions: Purchase A Desky Office Desk As A Business Asset
At the start of May, the Government announced that the expanded instant asset write off scheme was to be extended up until 30 June 2023. This could potentially save small businesses thousands of dollars in tax write-offs - and makes this the perfect time to invest in depreciable assets, and improve your workspace and worker productivity in the process.
Post-COVID-19, changes to the budget had extended the instant asset write off eligibility period (from when an asset is first used or installed ready for use) from 31 December 2020 - extending the 'use and install period' by giving businesses an extra six months, until 30 June 2021, to first use and install those assets. But initially, depreciable assets still needed to have been purchased by 31 December 2020.
When the temporary full expensing measure was extended last year, however, the increased scope greatly expanded the range of people and businesses eligible to benefit from the scheme, allowing larger businesses to take advantage. This meant that businesses with an annual turnover of less than $5 billion could now deduct the full cost (no longer capped at $150,000) of eligible capital assets acquired after 6 October 2020 and first used or installed by 30 June 2022 - and importantly, it has now been extended to June 2023.
It is worth noting also that businesses are also able to claim full deductions for the cost of improvements made to existing depreciable assets. Individuals can also claim under the scheme as employees, but only up to $300 - items over this amount would need to be depreciated.
The initial scheme was welcome news for many Australian SMEs, allowing them to upgrade their assets and see the fruits of the tax deduction benefits in the current tax year - and so the extension has been greeted with understandable enthusiasm. If this is the first you’re hearing of the scheme, however, don’t worry - there’s still plenty of time to take advantage before the end of this financial year.
Instant Asset Write-Off Scheme Extended Until June 2023The instant asset write-off scheme enables businesses to write off the tax on the entire amount of depreciable asset purchases in the financial year they were purchased. Pre-COVID, in many instances a business purchasing an asset could only write off a portion of that assets expense, and would often have to reclaim over several years.
By deducting the full expense in a single year, businesses can decrease their taxable income and, therefore, the tax they pay out of this year's budget. Designed to stimulate the economy post-COVID, the scheme aims to help businesses invest and grow over the next few years, to try and offset the shrink in the economy caused by lockdown.
Using the instant asset write off, 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, crucially - office furniture.
In fact, there may never be a better time than now to upgrade your office furniture. Standing desks are already linked to a marked increase in employee wellbeing, and as a result, productivity. And after a rough few years, now might be the perfect time to invest in your staff anyway.
If, up until now, you have always held back on upgrading your workspace because of the delay in cash flow between purchasing the asset and receiving the tax benefit, then taking immediate advantage of the instant write-off initiative may well be appealing. With only a month to go until the end of the financial year, a purchase made now could make you a near instant tax saving - and purchases made right up until 30 June 2023 can be claimed in the next tax year.
Claim A Hefty Tax Deduction On Your New Standing DeskThe extension to the instant write-off initiative is designed to further boost cash flow for Australia’s small (and now big) business owners well into 2023. To take full advantage though, you will need to understand how the deduction process works, to help you make smart purchases to benefit your company as you budget for this tax year and next.
Let us look at an imagined example of how the extended instant asset write-off works.
John runs a small office. His team of 4 had been working from home during lockdown. Things have been a bit strange with some people working back in the office, and some less keen to return: and 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 $2,916. Joan’s back aches if she sits for too long, so he buys a Desky Ergonomic Mesh Chair ($349). The others prefer to work standing up, so he invests in 3 Desky Sit Stand Active Stools (total $717).
Having spent a total of $3982, at the small business company tax rate of 27.5 per cent, John could save $1095.05 in tax as a result of the purchase.
Save Tax And Boost Productivity With New Office EquipmentThe benefits of standing desks are well documented, but there’s no harm in restating them.
- Help to boost circulation and increase energy levels in employees.
- Proven to help to prevent obesity and related health problems.
- Known to be an aid in preventing postural, muscular and repetitive strain injuries.
- Minimise sick days lost as a result of ill health and injury.
- Healthy, happy staff are shown to be more productive.
So by purchasing now, you could see not only your tax back before the end of the year - you might also see a spike in productivity too.
Purchase Your Standing Desk Before The End Of June As Part Of The Instant Asset Write-Off Scheme
Before the Instant Asset Write-Off scheme, it was more difficult to claim 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 (for this years tax return, that is - the scheme has been extended until June 2023).
A desk from Desky could be the perfect purchase for your new office fitout. And it makes perfect business sense to order yours before the deadline! If you’re tempted to take advantage of the tax breaks on offer and want to improve your office, your staff’s wellbeing, and ultimately your output, see our Desk Buying Guide 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.