You may have heard the Government’s recent announcement of an immediate tax deduction for small business asset purchases costing less than $20,000.

The measure came into effect on May 12 and is expected to be passed as law by both houses of parliament. Any business that meets the definition of ‘small business entity’ and turns over an aggregated sum of less than $2 million may be eligible for the incentive, which is expected to end by 30 June, 2017.

Your business may now be eligible to receive an immediate deduction on business expenses against your income to reduce your tax bill.

Meanwhile, the $20,000 threshold will apply to new and used vehicles acquired and installed ready for use between 13 May 2015 and 30 June 2017. This means a potential increase in sales for dealerships from business owners seeking to make new car purchases. After 1 July 2017, the thresholds will revert back to existing arrangements.

Tax advisory specialists, BDO Australia, have prepared a ‘Tax Savings Ready Reckoner’ that calculates the immediate tax deduction amount for vehicles in a range of prices (see below):

For more information about this latest Government scheme consult the ATO website or speak to your professional advisors.