Legislation was passed on 4 April 2019 to increase the threshold of the small business Instant Asset Write-Off scheme from $20,000 to $30,000 and extend eligibility to medium-sized businesses with a turnover of up to $50 million (previously $10 million). The scheme is also now legislated to continue through to 30 June 2020.
Labor has supported the bill, effectively incorporating the coalition policy into its own framework alongside the Australian Investment Guarantee; a permanent scheme which will allow businesses to claim up to 20 per cent in the first year of any new depreciable asset worth over $20,000.
What is the instant asset write-off scheme?
Under the instant asset write-off scheme, from 2 April 2019 if you have a small business with an aggregated turnover of less than $50 million, you can deduct the business portion of a depreciating asset worth less than $30,000 in the year you bought and used it. Additional points to note:
- the purchased asset can be new or second-hand
- the total cost of the asset must be less than the threshold amount irrespective of any trade-in amount you receive
- if you later dispose of an asset for which you claimed an instant write-off, the proceeds are included in assessable income
- In working out the amount you can claim you must subtract any private use portion
Due to the latest amendments, there are now three tiers to the Instant Asset Write-Off which are applicable to the 2019 income year:
- Tier 1 – $20,000 threshold for eligible assets acquired before 29 January 2019
- Tier 2 – $25,000 threshold for eligible assets acquired between 29 January and 2 April 2019
- Tier 3 – $30,000 threshold for eligible assets acquired between 2 April and 1 July 2020
Before making an asset purchase, we suggest you speak to your accountant to discuss how the purchase might impact your cash flow or current tax position. For more information on the instant asset write-off scheme, or further advice on timing your asset purchases, please contact our advisors on 07 3831 1055 or [email protected].
DISCLAIMER: The information on this website and the links provided are for general information only and should not be taken as constituting professional advice from Hall Browns Accountants. You should consider seeking the appropriate legal, financial, or taxation advice to check how the website information relates to your unique circumstances.