If you buy an asset and it costs less than $20,000, you can claim an immediate deduction in your tax return for the business portion of each asset (new or second hand) costing less than $20,000, if:
- You have a turnover of less than $10 million (increased from $2 million on 1 July 2016), and
- The asset was first used or installed ready for use in the income year you are claiming it in
Assets that cost $20,000 or more cannot be immediately deducted and will continue to be deducted over time using the general small business pool. You can however write-off the balance of this pool if the balance (before applying any other depreciation deduction) is less than $20,000 at the end of an income year.
When it was first introduced the write-off threshold applied to businesses with a turnover of less than $2 million. Therefore, since 1 July 2016, it has had far wider application than was originally intended due to the change in the turnover limit to $10 million.
In determining the timing of purchases that may qualify for the instant asset write-off, it is noted the period of the write-off threshold was extended previously to 30 June 2018. However, at this time there has been no firm indication that a further extension will be announced in the May 2018 Federal Budget.