Instant asset write-off expansion

The $150,000 instant asset write-off has now been extended until the end of the year

As a measure to encourage business investment, the government recently announced it would extend the $150,000 instant asset write-off until 31 December 2020. The extension, which is projected to cost government revenue of $300 million over the forward estimates period, will see around 3.5 million businesses benefiting from it.

In a media statement on the 9^th June, the Treasurer, Hon Josh Frydenberg stated, “The instant asset write-off also helps to improve cash flow for businesses by bringing forward tax deductions for eligible expenditure. The threshold applies on a per asset basis, so eligible businesses can immediately write-off multiple assets provided each costs less than $150,000.”

“The extension will also give businesses additional time to acquire and install assets, as they will now have until the end of the year. Assets can be new or second hand and could include for example a truck for a delivery business or a tractor for a farming business.”¹

CURRENT LAW

Under the current law, eligibility for the instant asset write-off has been expanded to include businesses with an aggregated turnover of less than $500 million (previously $50 million) from 12 March until 31 December 2020.

The following tips can help you get your instant asset write-off claim right:

• check if you’re an eligible business
• both new and second-hand assets can be claimed, provided each asset costs less than $150,000
• assets must be first used or installed ready for use between 12 March and 31 December 2020
• a car limit applies to passenger vehicles (a passenger vehicle, except a motorcycle or similar vehicle, designed to carry a load less than one tonne and fewer than nine passengers). The limit is $57,581 for the 2019–20 income tax year, and $59,136 for the 2020-21 income year.
• if your asset is for business and private use, you can only claim the business portion
• different eligibility criteria and thresholds apply to assets first used, or installed ready for use, prior to 12 March 2020.

If you do not use the simplified depreciation rules, you may be eligible to deduct an amount using accelerated depreciation if the asset is an eligible asset.

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Source:

¹ https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/media-releases/extending-instant-asset-write