Are you thinking of purchasing assets for your business? Here are some changes to the instant asset write-off that you should know about:
The Australian Taxation Office (ATO) offers an instant asset write off to small businesses using the simplified depreciation rules. Assets costing less than the relevant instant asset write-off threshold can be written off in the year they are first used or installed ready-for-use. This threshold applies to each asset irrespective of whether the asset is purchased new or second-hand.
Recently the ATO extended the write-off to 30 June 2020 and increased the threshold to $30,000. Medium sized business with a turnover of up to $50 million can also access the instant asset write off from 2 April 2019 (previously this concession was limited to small businesses with a turnover of less than $10 million).
If you purchase a new or second-hand asset, costing less than $30,000, which is used or installed ready for use from 7:30 pm AEDT on 2 April 2019 until 30 June 2020, you can claim a deduction for the business portion.
For assets purchased before 2 April 2019, the following thresholds apply:
- from 29 January 2019 until before 7.30pm (AEDT) on 2 April 2019, the threshold is $25,000;
- before 29 January 2019, the threshold is $20,000.
You may purchase and claim a deduction for multiple assets provided each asset is under the relevant threshold amount. You can't immediately claim a deduction for individual assets that cost more than the threshold amount. You can continue to deduct these over time using the small business pool (if you are a small business with turnover less than $10 million) or general depreciation rules (if you are a medium sized business with turnover between $10 million and $50 million).
If you need assistance with instant asset write-off, please talk to your tax advisor. For more information on asset instant write-off, click here.