Small businesses are being warned by tax accounting firm H&R Block not to be drawn into "bending the rules" just so they can capitalise on the government's proposed tax deductions.
Last week, the federal government announced $5.5 billion of budget measures for small businesses including a 100 per cent tax write-off for assets purchased that cost less than $20,000.
H&R Block welcomed the proposals, but warned in a statement that, “the generous nature of this tax break means that some will be tempted to bend or break the rules in order to claim the deduction".
“The Australian Taxation Office will be watching closely and will no doubt devote compliance resources to checking these claims,” the firm said.
Small business owners should not let the generosity of the tax break “override their commercial instincts”.
“This tax break is ideal for those businesses which were planning to purchase assets anyway or have a real business need to invest,” the statement said.
“There’s no such thing as free money. You have to spend a dollar to get 30 cents back (or 28.5 cents after 1 July) so make sure those capital purchases fit with your overall business plan,” H&R Block said.