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Changes to the instant asset write-off scheme for business

The instant asset write-off scheme allows eligible businesses to immediately write off, as an expense for tax purposes, new or second-hand asset purchases.

For the period 12 March until 31st December 2020, the instant asset write-off has increased as follows:

  • Threshold amount for each asset increased to $150,000 excluding GST (up from $30,000)
  • Eligibility expanded to cover businesses with an aggregated turnover of less than $500 million (up from $50 million).

The asset must have been purchased and be installed ready for use by 31 December 2020.

This deduction applies on a per asset basis, meaning it can be applied to multiple asset purchases.

 

Exclusions and Limits: There are a small number of assets that are excluded, e.g. the instant asset write-off is limited to the business portion of the luxury car depreciation limit for the income tax year. You cannot claim the excess cost of the car under any other depreciation rules.  Talk to your accountant or advisor if you need clarification.

 

As the instant asset write-off eligibility criteria and threshold have changed over time, it is recommended that you check with your accountant as to your business’s eligibility and to ensure you apply the correct threshold amount.

 

What happens after 31st December?

As it currently stands, unless there is either the new $150,000 threshold or the previous $30,000 threshold is extended beyond 31 December, the instant asset write-off threshold will revert to $1,000 from 1 January 2021, and the business turnover limit will reduce to $50 million.

If you are purchasing an asset and require finance, or you need further information, please call us.

 

Source: Australian Taxation Office

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