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instant asset write off

Instant Asset Write Off Changes for Eligible Businesses

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There have been some significant changes to the Instant asset write off thresholds from the 12 March 2020.

What is an Instant Asset Write Off?

An Instant asset write-off is the ability for eligible businesses to claim an immediate deduction for the business portion of the cost of an asset in the year the asset is first used, or installed ready for use.

What can it be used for?

  • multiple assets as long as the cost of each individual asset is less than the relevant threshold
  • new and second-hand assets.

It cannot be used for assets that are excluded from the simplified depreciation rules.

The instant asset write-off eligibility criteria and thresholds have changed over time. It is important to check your business’s eligibility and apply the correct threshold amount. The threshold amount depends on when the asset was purchased, first used or installed ready for use.

Changes introduced to the Instant Asset write off from 12 March 2020?

From 12 March 2020 until 30 June 2020 the instant asset write-off:

  • threshold amount for each asset is $150,000 (up from $30,000)
  • the eligibility has been expanded to cover businesses with an aggregated turnover of less than $500 million (up from $50 million).

Eligibility 

Eligibility to use instant asset write-off on an asset depends on:

  • your aggregated turnover (the total ordinary income of your business and that of any associated businesses)
  • the date you purchased the asset
  • when it was first used or installed ready for use
  • the cost of the asset being less than the threshold.

If you run a small business and choose to use the simplified depreciation rules, you must use instant asset write-off on all eligible assets.

Businesses with an aggregated turnover of $500 million or more are not eligible to use instant asset write-off.

From 1 July 2020 the instant asset write-off will only be available for small businesses with an aggregated turnover of less than $10 million and the threshold will be $1,000.

Exclusions and limits

There are a small number of assets that are excluded.

In addition, if you purchase a car (a passenger vehicle, except a motor cycle or similar vehicle, designed to carry a load less than one tonne and fewer than nine passengers) for your business, the instant asset write-off is limited to the business portion of the car limit of $57,581 for the 2019–20 income tax year.

For example, if you use your vehicle for 75% business use, the total you can claim under the instant asset write-off is 75% of $57,581, which equals $43,186.

Our team at Gerard Wilkes & Associates are here to help. If you have any questions regarding this article, or would like to discuss your taxation matters further, please contact us at https://www.wilkes.com.au/contact-us/ or call our office 07 5532 1733.

Article referenced from: https://www.ato.gov.au/Business/Depreciation-and-capital-expenses-and-allowances/Simpler-depreciation-for-small-business/Instant-asset-write-off/

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