As the Australian financial year draws to a close, businesses begin to assess their financial statements and prepare for EOFY tax returns.
The ATO provides several incentives and deductions for businesses to minimise their tax liabilities. Being more strategic with your spending ensures that purchases not only provide tax benefits, but also enhance operations and boost productivity. Investing smartly in capital assets such as technology, office furniture & equipment, and vehicles can provide immediate tax deductions.
Under the Instant Asset Write-Off scheme, small businesses with an aggregated turnover of less than $10 million can immediately deduct the full cost of eligible assets costing less than $20,000. These assets must be purchased and ready for use between 1 July 2023 and 30 June 2025.
For assets valued at $20,000 or more, businesses can use the simplified depreciation pool. This will allow your business to depreciate assets by 15% in the first year and 30% annually thereafter. Taking advantage of EOFY purchases can help your business reduce old stock and invest in new assets, modernise your infrastructure and remain competitive without incurring significant upfront costs.
1. Technology and Equipment Upgrades
Staying ahead in the fast-changing technological environment requires strategic investments in the latest tools and equipment. For businesses of all sizes, EOFY presents an opportunity to assess current systems and upgrade to more advanced technology.
Monitors/Laptops/Equipment
Upgrading computers, servers, and other IT infrastructure can significantly improve operational efficiency and security. Newer models often provide better performance and energy efficiency, resulting in reduced long-term operational expenses.
For instance, equipping employees with dual monitors or larger screens can enhance their multitasking capabilities, reducing the need to switch between applications and boosting efficiency.
Software and Subscriptions
Businesses rely heavily on software for various functions, including accounting, customer relationship management (CRM), project management, and communication.
Investing in or renewing software subscriptions—such as cloud services, accounting software, and productivity tools qualify for immediate tax deductions under the instant asset write-off scheme.
Printers, Shredders, and Scanners
Printers, scanners, and shredders have undergone significant transformations to align with the ever-changing needs of modern workplaces. Featuring wireless connectivity, mobile printing functions, and smooth integration with cloud services, these tools enable employees to work flexibly across various devices and locations.
These devices have shifted towards sustainability, aligning with the increasing focus on environmental responsibility in businesses. With features such as duplex printing, which allows for double-sided printing, they help conserve paper and reduce waste significantly. Additionally, electronic document storage capabilities enable businesses to minimise reliance on paper documents, contributing to a more sustainable and environmentally-friendly workplace.
2. Inventory and Supplies
For businesses handling physical products, evaluating inventory levels and restocking supplies is essential as the financial year-end approaches.
Raw Materials and Finished Goods
Stocking up on raw materials and finished goods can ensure smooth operations and prevent potential supply chain disruptions.
Office Supplies
Everyday office supplies such as stationery, printer ink, and other consumables are also fully deductible. Buying these in bulk before the EOFY can ensure the business is well-stocked and prepared for the new financial year.
3. Health & Safety Equipment
Ensuring a safe work environment not only helps businesses to meet regulatory standards but also cultivates a more productive and positive workplace. Investing in safety equipment and implementing wellness programs can enhance overall employee satisfaction and are fully deductible and contribute to the wellbeing of employees.
Personal Protective Equipment (PPE)
Equipping your workplace with essential PPE such as masks, gloves, and sanitisers is essential, especially in industries where employees are exposed to health risks.
Safety Improvements
Investing in better lighting, ergonomic workstations, and enhanced ventilation systems can prevent workplace injuries and illnesses.
This proactive approach not only reduces absenteeism but also boosts productivity by fostering a safer and more comfortable work environment.
Wellness Programs
Gym memberships, health checks, and mental health support are invaluable investments. These initiatives address both the physical and mental health needs of employees and can create a supportive environment where employees feel valued and motivated.
4. Office Renovations and Improvements
With Australian full-time on-site office spending approximately 39 hours per week at work, businesses need to invest in ergonomic furniture and tech accessories. Upgrades like adjustable standing desks, ergonomic chairs, mouse & wrist rests, and footrests can significantly improve employees’ mental well-being and concentration, creating a happier and healthier work environment.
These investments typically fall under capital expenses, allowing businesses to depreciate them over several years, providing long-term tax benefits.
Energy-Efficient Upgrades
Implementing energy-efficient solutions such as LED lighting, solar panels, and HVAC systems not only cut operational costs but also qualify businesses for government incentives and rebates.
These enhancements align with companies’ sustainability objectives and can lead to ongoing savings on utility expenses.
Workspace Optimisation
Creating open-plan areas, equipping meeting rooms with cutting-edge technology, and adding breakout spaces for informal meetings and relaxation can promote collaboration and significantly boost productivity.
Breakout space
As more and more businesses are enticing employees to return to work, it’s important to create a space where they can relax, interact, and collaborate with others.
Invest in relaxing and comfortable seating options that allow employees and visitors to unwind and be at ease. Choose furniture that encourages them to take a break from their work. Consider plush couches, ottoman, bean bags, and pod seats to add a bit of fun texture and a splash of colour to the surroundings.
Kitchen Upgrade
Maintaining a well-equipped kitchen can enhance productivity and satisfaction among employees. Consider investing in a high-quality coffee machine and upgrading the refrigerator to address storage issues and energy efficiency, thus boosting employee morale and saving costs.
5. Vehicle Purchases
For businesses that rely on vehicles for operations, EOFY is the perfect time to consider upgrading their fleet. The ATO allows deductions for vehicle purchases, including cars, vans, and trucks. The instant asset write-off scheme can also apply here, allowing businesses to claim immediate deductions for vehicles used for business purposes.
Commercial Vehicles
Investing in commercial vehicles can enhance delivery efficiency and expand operational capabilities. Modern vehicles often come with better fuel efficiency and lower maintenance costs, contributing to long-term savings.
Electric and Hybrid Vehicles
With a growing focus on sustainability, electric and hybrid vehicles are gaining popularity in Australia. EVs not only reduce environmental impact but also provide notable tax advantages. The Australian government offers various incentives for the acquisition of electric and hybrid vehicles, such as tax rebates and lower registration fees.
6. Training and Development
Investing in employee training and development programs is not only beneficial for skill enhancement but also tax-deductible for businesses. Consider enrolling your staff in relevant courses, workshops, or seminars to upgrade their skills and knowledge. Training expenses demonstrate a commitment to professional development and can be claimed as deductible business expenses.
Professional Development Programs
Providing certifications and advanced training can be particularly beneficial. These programs help employees stay updated with industry trends and advancements, making the business more competitive.
Online Learning Platforms
Subscriptions to online learning platforms such as LinkedIn Learning, Coursera, and Udemy offer a wide range of courses that can be accessed anytime. This will not only encourage continuous learning but also empower your workforce to acquire new skills relevant to their roles, contributing to overall organisational success.
