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Instant asset write-off for small businesses to be extended and increased

As of 29 January 2019, the Instant Asset Write-Off Scheme will be extended to 30 June 2020 for assets purchased under $25,000.

The Instant Asset Write-Off affects small businesses with a turnover of up to $10 million a year. It allows business owners to immediately deduct assets costing up to $25,000 which can then be claimed for tax return in that income year. The Prime Minister’s announcement on 29 January stated that “businesses who go out and invest today, whether it’s a vehicle, whether it’s a piece of plant or equipment, all of it, up to $25,000, immediate write down.” However, there are certain assets that are excluded from the scheme so it is best to check with your accountant or financial advisor.

It is important to remember that the Instant Asset Write-Off Scheme reduces the tax your business has to pay, it is not a rebate. Your cash flow will still have to be sufficient enough to support the purchases.

With the ATO reporting that the average claimed amounts were at $11,000 in 2016-2017, there are concerns that the scheme is underutilised. Fewer than 350,000 small businesses have taken advantage of the scheme in the 2016-2017 year.

There is no guarantee that the Federal government will extend this scheme beyond 30 June 2020.

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Investing in shares vs property in SMSFs

March 19, 2020

Shares and property are two popular investment options for those with a self-managed super fund (SMSF). However, they both have very different attributes and choosing the one that will achieve the best outcome for an SMSF depends on your personal goals and situation.

While the price of shares can vary drastically, property is a relatively stable asset, making it appealing to those who want more security and predictability. Property prices are also negotiable unlike shares, and you can generally borrow money at a lower rate for property purchases.

It may seem hard to find the perfect investment property, but older and undercapitalised properties can be renovated for profit. However, returns from property rentals can be dented due to factors such as land tax, utilities and rates, maintenance and tenancy vacancies.

Shares are more dynamic and volatile than property. One advantage is the accessibility of investing in shares, as you can enter the share market with a few thousand dollars – much less than what you need to invest in a property.

Maintaining a portfolio of quality shares that pay tax-effective dividends may be a good way to fund retirement. With the right portfolio allocation, shares also have the potential to provide a better, stronger income than property rentals, as long as that income is sustainable and increasing.

Property can generally be used as a wealth-creation tool, while shares can create a reliable retirement income. For those who can afford to put more money into investments, it may be a good idea to consider investing and diversifying in both. If you’re unsure about which investment option is right for you, seeking financial advice may be the best option.