On March 12th, 2020 big changes to the Instant Asset Write Off were announced. Initially the 2019/20 financial year saw the threshold amount for each asset sitting at $30,000, however for the period between March 12, 2020 – June 30, 2020 that threshold has been lifted to $150,000 for each asset, with eligibility expanded to cover businesses with an aggregated turnover of less than $500 million (up from $50 million).
Until the June 30, 2020 cut-off every business that meets the criteria will be able to claim the write-off to as many individual items as they wish, providing cash-flow benefits for those able to take advantage.
Eligibility to take advantage of the instant asset write off depends on:
- your aggregated turnover
- the date you purchased the asset
- when the asset was first used or installed ready for use
- the cost of each asset being less than the threshold
Come 1st July 2020 the instant asset write-off will revert to being available only to small businesses with an aggregated turnover of less than $10 million and the threshold will be $1,000. Take advantage now before it’s too late!
What exactly is the Instant Asset Write-off?
The instant asset write-off allows eligible businesses to immediately write off the cost of any asset they purchase in a particular financial year, providing that it costs less than the current threshold (remember, the increased threshold goes away June 20, 2020). Thus allowing eligible businesses to claim a significant tax deduction on said purchase, well at least for the business portion of the purchase cost (in the year the asset is first used or installed ready for use).
This not only creates a cash-flow benefit for businesses, it also simplifies tax returns since any assets valued under the threshold immediately qualify for the write-off.
To make the most of these deductions and the recent changes to thresholds and eligibility, businesses will need to claim before June 30 of this year.
What can I claim?
The allowance permits for any business related asset including new tech, operating equipment, cars, and furniture/fit-outs.
There are a small number of assets that are excluded.
Like most things tax related, the changes to the instant asset write off are varied and complex. For a full break down of the ins and outs of the instant asset write off for the 19/20 financial year you can check out this page on the ATO website. And remember, come 12:01am on July 1st these changes disappear.
