Shifting Benefits – Budget 2017 - 18

Last night’s Federal Budget, amongst many other things, set out a program aimed at helping small businesses and reducing pressure on housing affordability by tweaking deductibility rules for capital expenditure. The result is a net gain that will go towards the cost of implementing the first home super saver scheme.

In summary, small businesses will have an additional year to take advantage of the immediate deduction for assets with a cost of less than $20,000. Access to this will be greatly increased from businesses with a turnover of $2 million to $10 million being eligible for the deduction.

On the other hand, investors in residential property will have reduced access to depreciation deductions for Division 40 depreciating assets, also known as plant and equipment where they acquire second hand property. They will still be able to claim deductions for the building component of the property, known as Division 43 capital works deductions. Investors acquiring new property that has not been depreciated, or new assets within an existing property, will still be able to claim both Division 40 and Division 43 deductions, although until the legislation is finalised, it is unclear if this will be on the same basis as the current regime. There is also an end to being able to claim travel and accommodation to visit, maintain and lease residential rental properties as deductible expenses.

Once the legislation is published, we will provide an update of the mechanics of the changes and how they will affect property investors and small businesses Read the budget papers here.

If you require any further information in the meantime, please do not hesitate to contact your local MBM office to speak to our depreciation specialists.