End of Financial is approaching. Have you heard of the Federal Government’s instant asset write-off?
The threshold has increased to $30,000, and has been extended to 30 June 2020
The instant asset write-off now also includes businesses with a turnover from $10 million to less than $50 million. These businesses can claim a deduction of up to $30,000 for the business portion of each asset (new or second hand), purchased and first used or installed ready for use from 7.30pm (AEDT) on 2 April 2019 until 30 June 2020.
Businesses with a turnover of up to $10 million can also claim a deduction for each asset purchased and first used or installed ready for use, up to the following thresholds:
Your business clients can’t immediately claim a deduction for individual assets that cost $30,000 or more. They can continue to deduct these over time using the small business pool or the general depreciation rules, depending on their turnover.
What does this actually mean?
As you know, deductions are typically available for purchases that are made by your business, for your business. The purpose of the $30,000 Instant Asset Write Off is to accelerate the speed at which you can make deductions for those purchases.
Since the commencement of the scheme, small businesses (ATO definition of small business) have been able to instantly deduct business assets that cost $30,000 or less. This allows business owners to claim a deduction for that asset in the same income year as the asset was purchased. This deduction is then able to be claimed on the business’s tax return for that income year.
The initiative has been around since 2015 and is set to be extended to 30 June 2020, so there is still plenty of time for you to consider making use of this tax deduction.
Before making any large purchases, we suggest you speak to your accountant or tax professional and assess how the asset will benefit your business and how the purchase may impact on your cash flow or finances in the short term.
If you decide to take advantage of the instant asset write-off, you should make the decision based on the needs of your business. For example, if you need to purchase a vehicle for deliveries to expand your business operations to help you achieve your business goals, or it is in line with your business plan.
For more information on the instant asset write-off visit the Australian Taxation Office website or speak to your accountant or a qualified tax professional.
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