The Federal Treasurer Joe Hockey has handed down his second Federal Budget. In recent years one of the least surprising days of the year has been Budget night, from a business and tax perspective at least. It's pretty much standard practice now that the most significant Budget measures are either announced as separate packages, or otherwise 'leaked' prior to the Budget announcement, presumably to manage expectations and test the waters a little. This year is no exception.

Read our full summary of the tax and business highlights here.

One of the big surprises in the recent Federal Budget was the announcement of an immediate increase to the limit below which an asset can be written off immediately for tax purposes. This applies only to small businesses (those with turnover below $2 million), and is effective from Budget night, 12th May 2015.

What does this mean? Assets such as equipment, motor vehicles and so on must normally be depreciated for accounting and tax purposes. This means that while you do ultimately get a deduction for the full cost of the asset, it is spread over a few years, based on the useful life of the asset.

This announcement means that assets with a value of less than $20,000 purchased by a small business can now be claimed as an immediate deduction in the year of purchase. The previous limit was $1,000; however this had recently been reduced from $6,500 so this announcement was a rare (but well-received) turnaround.

The advantage is purely one of timing, however being able to claim the full value of an asset in a single year can result in a significant cash flow injection by bringing forward a reduction in tax payable.

If you're a small business looking for a way to reduce the amount of tax you'll have to pay this year, and are in need of new equipment, buying it before 30th June will make a big dent in your tax bill. Note too that the limit is per asset, so multiple purchases will multiply the effect.

Don't get too excited though. It's really only good news for those who were planning on buying equipment anyway. The effect really is an immediate discount on the cost of an asset, not a direct inflow of cash. If (say) your average rate of tax is 30%, you're still up for 70% of the cost, so there's no point buying equipment you don't need just to get the discount.