Time's ticking to claim under the Instant Asset Write-Off

The instant asset write-off allows small businesses to claim immediate deductions, (up to a limited amount), for new or second-hand plant and equipment asset purchases including vehicles, tools and office equipment.

Until 30th June 2020, the business turnover threshold to access the instant asset write-off has increased from $10 million to $50 million. The federal government has also increased the threshold of the asset from $25,000 to $30,000 during this time period. After 30th June 2020, the asset

threshold may reduce to $1,000 and the business turnover threshold may reduce to $10 million. As we commence the third fiscal quarter, it’s a timely reminder to consider your options for the instant asset write-off as there may only be a limited amount of time remaining to claim this deduction.

The instant asset write-off applies on a Per Asset Basis…

…so that several assets costing less than $30,000 could qualify for the instant asset write-off. Accordingly, it is necessary to consider whether expenditure incurred on the purchase of assets can be allocated to ‘composite items’ (i.e. separately identifiable assets) costing less than $30,000.

Contact your Client Manager (Melissa McKenzie or Cheryl Murdock) or Gavin Smith, to ascertain whether your purchase is able to be identified as a composite item as there are Taxation Rulings providing guidance on this matter.

The instant asset write-off is only available for depreciating assets…

The instant asset write-off is only available for a limited time

…which are assets that have a limited effective life and that can reasonably be expected to decline in value over time.

However, the following assets are excluded from this definition:

Items of trading stock;
Certain intangible assets; and
Amounts deductible as construction expenditure on capital works

TAXABLE USE

The instant asset write-off applies to the total cost of the asset, not just its taxable portion. For instance, if the cost of an asset is $32,000 and you have determined that the taxable portion of the asset is $24,000, the asset will be ineligible for the instant asset write off as its total cost exceeds $30,000.

To discuss how the instant asset write-off can benefit your small business in the lead up to the end of the financial year, feel free to contact us on (08) 9071 2173.