Federal Government’s $30,000 instant asset write-off has been increased to $150,000 as of the 12th of March 2020! All small businesses get an immediate tax deduction for any individual assets they buy costing less than $150,000.
Using the instant asset write-off, you can claim a deduction for each asset that costs less than the threshold which is applied when the asset was first used or installed ready for use. Different thresholds apply, so make sure you check which one applies to your asset.
The key features of the scheme listed on the ATO website include:
BENEFIT — deduction of 50 per cent of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost;
ELIGIBLE BUSINESSES — businesses with aggregated turnover below $500 million; and
ELIGIBLE ASSETS — new assets that can be depreciated under Division 40 of the Income Tax Assessment Act 1997 (i.e. plant, equipment and specified intangible assets, such as patents) acquired after the announcement and first used or installed by 30 June 2021. Does not apply to second-hand Division 40 assets, or buildings and other capital works depreciable under Division 43.
On your tax return, claim your instant asset write-off deduction under ‘Small business entity simplified depreciation’.
The usual rules for claiming deductions still apply. You can only claim the business portion of the expense, and make sure you have records to prove it.
Assets that cost more than the relevant threshold can’t be immediately deducted. You can deduct them over time using the small business pool.
Until 30 June 2020, businesses with a turnover from $50 million to less than $150 million can also use the instant asset write-off.
Remember, registered tax agents can help you with your tax.
For more information visit www.treasury.gov.au/coronavirus/business-investment