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Hair & Beauty Australia Industry Association


Posted June 18, 2018

In the Federal Budget 2018, we were all thrilled to hear that the Australian Governments Instant Tax Write Off for Small Businesses of up to $20,000 was going to be extended for another year.


HABA understands that salon owners, regardless of whether you fall into either the hair or beauty category, often have very high capital expenditure for new equipment. Some laser machines can cost up to $20,000 each and to buy a bank of steamers can cost the same if you’re refurbishing a salon. But how does the scheme work and how do you make sure that you get the maximum benefit from the ATO this tax time?


The Instant Tax Write Off for Small Businesses means that large capital expenditures, like salon equipment, are instantly taken off the bottom line of your business’ taxable income. In previous systems, this high amount of capital expenditure used to fall under a depreciating tax rate – meaning that you could claim a set percentage as part of your total small business expense pool over a number of years, rather than in one lump sum during the same year of purchase.


This system left salon owners feeling the pinch of big expenditures heavily in the first few years of ownership as these machines start to depreciate in value. Because of this, many salon owners would delay upgrading equipment for fear of these large costs quickly exiting the bank account and not being returned quickly enough to make a difference to cash flow.


Under the Australian Governments Instant Tax Write Off for Small Businesses if you purchase any asset for your salon by 30 June and it costs less than $20,000 you can write off the business portion in your 2018 tax return. Unfortunately though, assets that cost $20,000 or more can’t be immediately deducted. They will continue to be deducted over time under a depreciating tax rate, and you can then write off the balance of the general small business pool if the balance (before applying any other depreciation deduction) is less than $20,000 at the end of the financial year.


If you are unsure about what you can claim and how much can be claimed off your tax return this year from capital expenditure, HABA recommends speaking to a financial adviser immediately. They will work with you to ensure that you claim the maximum benefit under the Australian Governments Instant Tax Write Off for Small Businesses and in all areas of your business. For simple queries about how to be prepared this tax time in your salon, speak to the team at HABA on (02) 9221 9911.

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