Use it or lose it

The Institute of Public Accountants (IPA) wants to remind small businesses around Australia to take advantage of the current small asset write off threshold before it plummets as of 1 January 2014.

Small asset threshold will drop from $6.5K per asset to $1K, as part of the repeal of the Minerals Resource Rent Tax (MRRT).

"It is understandable that the Government needs to find ways to plug the hole left by the MRRT repeal but we would encourage small businesses to do some asset Christmas shopping if they are in a position to do so," said IPA chief executive officer, Andrew Conway.

"After 31 December, the asset write off threshold reverts back o $1K per asset so small businesses will need to factor a slower tax pay back period.

"You will need to buy before 1 January 2014 to get the full tax deduction for assets costing less than $6,500. The extra accelerated depreciation claim of $5,000 for motor vehicles will also be scrapped.

"One unfortunate casualty of the MMRT repeal which we do not support is the scrapping of the loss carry-back initiative after its short one year life-span.

"The loss carry back changes were mainly intended to give viable small businesses a boost when they need it the most through more timely tax loss relief.

"This had been the major shortcoming of the tax loss treatment rules for small corporate businesses; the inability to claw back previously paid taxes and having to wait to earn profits before they could recoup their tax losses.

"Whilst we acknowledge the challenging fiscal environment, we are still hopeful that the Government will review its decision to reverse the repeal of the loss carry back initiative," said Mr Conway.