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ATO $20,000 Tax Break for Websites - blog post image
  • Todd Johnson
  • June 05, 2017
  • Comment(s) | 0
  • Posted 4 years ago

The highlight of this year has to be the announcement from the ATO about the 12-month extension for the $20,000 small business tax break. Here’s what the authority already announced - it has accelerated the deprecation write-off on assets (costing less than $20,000) that will be purchased before 30th June this year. Almost all small businesses are exploiting this window of opportunity and have rushed to buy the assets on which this tax write-off is applicable to. This will temporarily replace the previous instant asset write-off threshold of $1,000.  

If there is a balance in the general business pool of assets, this will also be eligible for the immediate deduction provided that the balance is equal to or less than $20, 000 during this time period. This will be inclusive of existing general small business pool. The ATO has stated: ‘The current 'lock out' laws will also be suspended for the simplified depreciation rules (these prevent small businesses from re-entering the simplified depreciation regime for five years if they have opted out) until the end of 30 June 2017”.

Who all are eligible for the immediate tax write-off?

This new law is mostly about small business asset write-off instead of claiming the deduction over a number of years. So, anyone who qualifies to become a small business entity with less than $2 million worth of turnover is eligible for instant tax write-off and depreciation on the assets costing less than $20,000. The business must also be actively trading to be eligible.

What was the law before?

The threshold for the asset write-off was $1,000. Small businesses were taxed based on the simplified deprecation rules. Assets costing above $1,000 were added to the general small business asset  pool. A percentage of that balance is deducted at 15% of the asset cost added to the pool following by a 30% diminishing value rate for opening balance each year afterwards.

The business has to claim the deductions in the year when the asset was bought or ready to use. Also the claim could only be made to an extent to which the asset was used in the businesses income.

How the new law changed things?

Now that you understand the $20,000 small business instant write-off, you need to know how things have changed. The immediate deductibility threshold that was earlier $1,000 has now been increased to $20,000 starting from 7.30pm (AEST) 12 May 2015. It applies to the low pool value assets also. The law will now remain effective until the end of June 2018.

How will ATO monitor the change?

To make sure that the new law for the tax incentive for small business in 2017 thrives in the market without any repercussions, the ATO will engage with small businesses and also monitor their choices/buying behaviour. The ATO has released a set of clear and precise guidelines so that all the businesses which intend to use the new law to their advantage can now do so without any confusion.

But beware - a purchase behaviour on the part of a small business that might be indicative of a risky behaviour can expect higher interaction from the ATO. The ATO has a program that identifies high risk based behaviour for taxpayers who may not be fulfilling their tax obligations. It has various approaches and measures in place to influence taxpayer behaviour.

Taxation rules for software

Businesses that are eligible for the deduction can claim the website tax deduction for the software purchased that cost less than $20,000 provided that it is used exclusively for the business. Eligible entities can also claim deductions on the expense of developing the software if the expenditure is less than $20,000. However, if the entity has earlier claimed deductions as per the software development pool rules, there will be an exception to the rule.

Exploit the window of opportunity before it closes; invest in Business Catalyst

A website is an intangible asset and a tax deductible one at that. Not a lot of people know this but ATO views having a business website as a plus point. And, you should consider a quality website an asset too.

People no longer turn to Yellow Pages to find business information. Everything has become centralised thanks to the internet. Now you interact and do business with clients through your company website.

The entire business growth model starting from capturing the leads, to conversion, and the sales funnel system is now integrated online within the website.

That’s where Business Catalyst comes in

Now that EOFY is just around the corner, it’s the perfect opportunity for small businesses to invest in a website.

It’s true that professionals can create websites on their own, but they lack certain functionalities that are essential for the smooth integration of the business processes.

It’s important that a website looks and feels professional and is a reflection of what your business stands for. But, building a great website requires a professional eye and a good amount of experience:

Image: Professional Business Catalyst Websites- see our gallery

Australian Website Development is here to help small businesses exploit this opportunity by offering them the opportunity to purchase a website before June 30th so they can enjoy tax relaxation on this investment. Website builds by AWD come integrated with all the digital marketing tools including those for content building and email marketing.

Functionalities like quoting, capturing leads, and giving the clients a virtual tour along with questionnaires and e-book, and videos; all that comes with the websites that we build.

It’s not uncommon for website owners to end-up scratching their heads trying to work their way with a painful world of plug-ins, dashboards and what not just to manage things.

Adobe Business Catalyst from AWD is for SMEs who take their work business seriously and want nothing less than a professional looking site.

As a websites can typically take 3 months to build, we can invoice for the website now to leverage the new law and get taxation relief.

Normally website costs are written off at 40% every year over 2.5 years. Also, it’s apportioned by the days in a year. By that logic, any website bought on 1st of June will be apportioned as 30/365 for the first year.

But, now that the usual laws are on hold and have been temporarily replaced by small business $20,000 write-off, businesses can get instant tax relief and accelerated depreciation claims on websites they purchase.


All information provided in this publication is of a general nature only and is not personal financial or investment advice. It does not take into account your particular objectives and circumstances. No person should act on the basis of this information without first obtaining and following the advice of a suitably qualified professional advisor. To the fullest extent permitted by law, no person involved in producing, distributing or providing the information in this will be liable in any way for any loss or damage suffered by any person through the use of or access to this information





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