Its official! The instant asset write-off for this financial year is now $150,000 and the eligibility has been expanded.
On Monday night bills were passed through parliament, bringing into play a new set of benefits for business. Part of the original stimulus package included changes to the thresholds for immediate write-off of assets. Immediate write-off allows businesses to claim a tax deduction for the business portion of the purchase costs of assets, in the year the asset is first used or installed.
The key facts that business owners and managers should know:
- The threshold has increased to assets of the value of $150,000 (up from $30,000)
- Eligibility has been expanded to include much larger businesses. It now applies to businesses with annual turnover up to $500 million (up from $50 million).
- These changes apply from 12 March 2020 until 30 June 2020, so do not include assets purchased prior to the announcement of the stimulus package.
- Assets also need to be installed ready for use in this time frame.
- It includes the purchase of both new and used assets.
- Changes to thresholds are only ever announced for one financial year at a time. Subsequently the ATO website states that from 1 July 2020 the threshold will return to $1,000. The following table, adapted from the ATO website, shows the thresholds of the last decade:
|Date range||Threshold||Eligible businesses|
|12 March 2020 to 30 June 2020||$150,000||Less than $500 million turnover|
|7.30pm (AEDT) on 2 April 2019 to 11 March 2020||$30,000||Less than $50 million turnover|
|29 January 2019 to 7.30pm (AEDT) on 2 April 2019||$25,000||Less than $10 million turnover|
|7.30pm (AEST) on 12 May 2015 to 28 January 2019||$20,000||Less than $10 million turnover|
|1 January 2014 to prior to 7.30pm (AEST) 12 May 2015||$1,000||Less than $10 million turnover|
|1 January 2012 to 31 December 2013||$6,500||Less than $10 million turnover|
|1 July 2011 to 30 June 2012||$1,000||Less than $10 million turnover|
As a final comment, the instant asset write-off changes are designed as a stimulus measure. The government is encouraging businesses to keep spending, and this comes with obvious cash flow implications. Please contact YBM to discuss all the ways in which these changes could impact your business.
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By Nicola Brazier – YBMYates Baker McLean. Accountants and Business Advisors situated in the Central West of NSW. Offering comprehensive advice for all your financial needs including tax, auditing, business advisory, self managed super funds, specialised industry experience and financial planning.