Fixed assets, depreciation and the instant asset write-off scheme explained

Straight Up Small Business

For small business owners, it’s important to have a high level of understanding around certain concepts that will help make sense of our financials and ensure we make good decisions as we head into the financial year end and beyond.
Today I talk specifically about concepts that I find many business owners aren’t completely up to speed on, which are fixed assets and depreciation, and the government’s instant asset write-off scheme. In this episode, I encourage you to consider how these ideas may impact you and how you can apply them to your business.
When it comes to balance sheets, there is often a misunderstanding around what items should be entered under which code. And while most business owners have the help of professionals to clean up their bookkeeping, it’s important to have some conceptual knowledge to avoid the potential for confusion.
I define what a fixed asset is, and how it differs from equipment that does not have long-term benefits. I also run through the way fixed assets should be expensed in the profit and loss statement, as well as the calculations behind depreciation. I go a little bit deeper and explain the two types of depreciation, and how understanding these concepts will help you see the real value of your business.
Earlier this month, the 2023-24 Australian budget was announced, which included a change to the instant asset write-off threshold. This scheme has a big impact on small businesses, and can affect how much tax they need to pay. If you want to reduce your taxable income this financial year, it’s helpful to be aware of the schemes and initiatives on offer in order to take advantage of them. I talk specifically about the instant write-off scheme, running you through the maximum value that can be used and the limits in place.

There is a lot to know about keeping on top of your finances, and I hope today’s episode brings you some useful knowledge that you can implement to manage your business and tax affairs in the most effective way possible.

LINKS:

ATO Small Business Support - $20K instant asset write-off

Register your interest in the Bookkeeping it Real Mentoring Program here.

Check out my course Bookkeeping it Real here!

Where to Find Bec:

• Website:https://straightupbookkeeping.com.au/
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