Instant Asset Write Off Increase!

13 Mar Instant Asset Write Off Increase!

Government increases the instant asset write off as part of the Coronavirus Stimulus Package.

The Australian government this week announced a raft pf packages aimed at combating the economic impact of coronavirus. One of those measures is the expansion and increase of the $30K instant asset write-off.

This financial year’s incentive was originally increased from $20,000 (in the last financial year) to $30,000 and was for businesses with a turnover of less than $50 million. T

Under the scheme, eligible businesses with an annual turnover of under $500 million are able to claim an immediate tax deduction on items purchased that are valued up to $150,000. There’s also no limit to the amount of individual assets that can be claimed.

Tools for tradesmen or coffee machines for cafes have been suggested as examples of using the accelerated depreciation changes, but you can also use the small business incentive to buy a new or used car.

When is it available until?

The incentive has changed since it’s introduction on Budget Night 2015 (Tuesday, 12th May) and will now run up until 30 June 2020. Many small businesses are hoping that the scheme will be made permanent. . In 2017-18 there were more than 360,000 businesses that benefited from the current instant asset write-off, claiming deductions to the value of over $4 billion.

So, how does the business tax break help to get you a new equipemnt or vehicles?

First up, you need to be running an eligible business with an annual turnover of less than $500 million.

If so, you can start looking at purchases under $150,000. Only purchases under the $150,000 limit will be eligible for accelerated depreciation.

Depending on your particular circumstances, you may then be able to claim a deduction up to the full purchase price of the item in the year of purchase.

If I buy a car, what type of car can you buy?

Businesses have the option of purchasing a new or used vehicle that will be used for commercial purposes.

What about purchases over $150,000?

If you’re looking at a purchases over $150,000 it can still be deducted, but would not qualify for accelerated depreciation.

These purchases would be subject to existing deprecation rules as per the relevant tax law.

Financing your purchase to utilise the small business tax break

So, you’re a small business owner and you’ve got a purchase under $150,000 in mind. The only thing missing is the finance required to complete the purchase.

The good news is that the small business tax break remains whether you’re purchasing the vehicle through finance or not. That means you can go to a finance company, work out the appropriate package for you, and be enjoying your new car sooner.

It is important to consult with your tax agent/tax advisor to ensure the loan facility you are considering entitles you to take advantage of the accelerated depreciation scheme.

An important aspect to note, as always, is to organise your finance before selecting your car, which will give you a better idea of your budget.

Key takeaways

•Be an eligible business with under $500 million in annual turnover
•Choose a vehicle under $150,000 to ensure you maximise your tax deduction
•Organise finance before shopping to clarify your budget

This page is intended to provide you with general information relating to accelerated depreciation.

You should always consult your tax advisor prior to making any decisions on purchasing a vehicle for your business and using such schemes. We accept no liability for any reliance placed on the information provided on this page.

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