2024 guide: Tax benefits for pharmacy equipment purchases

Purchasing equipment is a significant expense for compounding pharmacies, but it can also offer valuable tax benefits. If you're planning to invest in new equipment for your pharmacy, you'll be pleased to know that certain business expenses, including pharmacy equipment, can be tax-deductible.

And for the 2023-2024 income year, there are some new rules and incentives to be aware of.

Instant write-off for small businesses

Under the Small Business Support (SBS) instant write-off, small businesses with an aggregated turnover of less than $10 million can immediately deduct the cost of eligible equipment purchases under $20,000.

To qualify, the equipment must be first used or installed and ready for use between July 1, 2023, and June 30, 2024.

What's new in 2024?

The SBS instant asset write-off scheme was initially set to expire in June 2023, but it's been extended through at least June 2024.

Additionally, the asset value threshold has significantly increased from $1,000 to $20,000, providing more flexibility and potential tax savings for small businesses.

Writing off equipment purchases

The $20,000 threshold applies on a per-asset basis, meaning you can write off multiple pieces of equipment as long as each one is valued below the threshold.

If the cost of an asset exceeds $20,000, it can still be placed in the small business simplified depreciation pool, with a 15% depreciation rate in the first year and 30% in subsequent years.

Consider the following example:

• You own a pharmacy with an aggregated turnover of less than $1 million.
• Your annual cost of goods sold and operating expenses, including purchases, office supplies, insurance, and salaries, is $700,000.
• You decide to purchase a new hood for $10,000.

Under the SBS instant asset write-off scheme, you can immediately deduct the entire $10,000 cost of the hood. With a 30% Corporate Income Tax Rate, this translates to $3,000 in tax savings.

What equipment qualifies?

The SBS instant asset write-off scheme covers all tools and equipment used in your pharmacy operations. To view the complete list of eligible assets and exclusions, click here.

What if my business's turnover exceeds $10 million?

Unfortunately, businesses with an aggregated turnover of more than $10 million are not eligible for the SBS instant asset write-off scheme. However, other tax benefits and depreciation methods may be available to you. Please get in touch with your tax advisor for more detailed information.

How Medisca can help you save

As your dedicated Partners in Wellness, Medisca is here to support your pharmacy's growth with high-quality equipment at competitive prices. As the financial year-end approaches, Medisca holds its annual equipment sale, allowing you to maximize your tax savings by taking advantage of our best deals.

Shop for savings now

Disclaimer: This content is for informational purposes only and does not constitute financial or tax advice. Please consult a qualified financial or tax advisor to understand how this information applies to your business.