If you are a business with a turnover of less than $10 million per financial year, you can now deduct the full cost of an asset costing up to $20,000, through the Instant Asset Write Off (IAWO) Scheme!
⚠️⚠️However, from 1 July, 2023, the instant write off is currently only legislated to be available for assets costing up to $1,000 instead of the current $20,000 threshold. If you think this change may affect your business, please continue reading.
What will the new Instant Asset Write-Off (IAWO) scheme allow my business to write off?
Like previous years, the new IAWO (instant asset write-off) scheme will allow businesses to claim a tax deduction for the full value of an eligible asset after its initial purchase, rather than to claim depreciated amounts over the following years, from its initial date of purchase.
The scheme will cover purchases with a cost of up to $20,000, which is the same amount that was previously legislated in 2015. The government’s intention with the new IAWO is to improve cash flow for small businesses while lowering compliance and accounting costs from managing asset depreciation over several years.
When does the current IAWO scheme finish and when does the new one start?
The current version of the IAWO scheme is due to finish on June 30, 2023, with the new IAWO scheme scheduled to start on July 1, 2023.
This new version of the scheme will be in place from July 1, 2023, to June 30, 2024, which means that any businesses wishing to take advantage of the current turnover rules and regulations will need to purchase any new assets and have them in place by the upcoming June 30, 2023, deadline.
What assets can businesses apply to the new IAWO scheme?
The new IAWO will apply to all eligible depreciable assets if they were purchased for less than the $20,000 threshold.
The $20,000 threshold applies on an asset-by-asset basis, with the Australian government saying it provides businesses with the ability to instantly write off multiple assets. According to the government, assets valued at $20,000 or more, which are not eligible for an immediate tax deduction, will continue to qualify for depreciation at a rate of 15% in the first income year, and at a rate of 30% in each subsequent income year.
Always seek the advice of your accountant with regard to thresholds, eligibility and your entitlements.