The Morrison government has extended the instant asset write-off by another six months to December at an expected cost of $300 million in an effort to prevent a further crash in business investment. The instant asset write-off scheme provides immediate tax deductions for small and medium-sized businesses on certain expenditure allowing such businesses to pay less tax on their profits. This frees up more cash for them now rather than over several years into the future when the tax deductions would have been able to be made.
In the financial year 2018 more than 360,000 small businesses benefited from that $20,000 instant write-off, with an average claim of over $11,000 for each of these businesses.
Assets that can be written off under the scheme can be new or second hand and could include, for example, a truck for a delivery business or a tractor for a farming business. The threshold applies on a per asset basis, so eligible businesses can immediately write off multiple assets each costing less than $150,000. Assets need to be first used or installed ready for use by December 31, 2020.
Image credit: Compact Equip.