Business Tax Tips – Instant Asset Write-Off $6500 – Case Working Example


Business Tax Tips - Instant Asset write-off $6500 – Case working example
Instant Asset write-off $6500 – Case working example

We reported on Dec 13 about 3 new rules that will benefit business, including the instant asset write-off of $6500. This rule replaces the previous $1000 instant write-off threshold, which is now $6500, and allows the full claim of assets costing less than $6500 as an expense against revenue. Eligible businesses must be in proper business and have annual turn-over of less than $2 mill (includes all entities that are affiliated or connected to you). The claim applies to when you start to use or when the asset is installed.

How does it work? Here is a case working example –

Fred’s mowing is a small business. In May 2013 they purchased a $3750 new lawn mower for the business. However it was delivered in July 2013. Since it was first used in full in July, it is claimable in the Year End 13-14 tax year. Consider carefully the timing of these events – it may be an advantage to hold off delivery, or if you need the deduction to reduce profit, enquire if delivery can be before 30 June.

The Value of the asset – The asset must be under $6500 in value (ex GST) so the FULL retail/wholesale is $7150 (including GST). The rule applies per asset – identical assets or that form part of a set are treated separately and not required to be aggregated. So in our case, buying 2 mowers will mean they are each valid and fully claimable as they each have the $6500 threshold applied individually. It is also possible to apply the $6500 to the taxable purpose portion of additions to EXISTING assets of value under $6500, where the additional cost is under $6500 – the addition is not added to the cost of the asset.

For more see ATO site

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