The 2019-2020 Australian Federal Budget included an increase in the ‘Instant Asset Write-off 2019’ for assets costing less than $30,000 (ie $29,999).
This allows businesses that meet the relevant turnover criteria to claim an income tax deduction in full for the cost of purchasing an asset that costs less than $30,000.
The new rules, now apply to all businesses with an aggregated turnover of less than $50 Million (previously they only applied to a ‘small business’ (turnover < $10 Million)) and will apply for assets purchased between 7:30 pm on 2 April 2019 and 30 June 2020.
Note – If your business is registered for GST, then the overall cost of the asset increases to $32,999 as the business can claim $2,999 as an input tax credit.)
These rules apply to each asset costing less than $30,000. Therefore, multiple assets could be purchased with each one entitled to a full tax deduction.
The ATO explains more –
Using the instant asset write-off, you can claim a deduction for each asset that cost less than the threshold that applied when the asset was first used or installed ready for use. Different thresholds apply, so make sure you check which one applies to your asset:
- $30,000 from 7.30pm AEDT on 2 April 2019
- $25,000 from 29 January 2019 until before 7.30pm AEDT on 2 April 2019
- $20,000 before 29 January 2019.
On your tax return, claim your instant asset write-off deduction under ‘Small business entity simplified depreciation’.
The usual rules for claiming deductions still apply. You can only claim the business portion of the expense, and make sure you have records to prove it.
Assets that cost more than the relevant threshold can’t be immediately deducted. You can deduct them over time using the small business pool.
From 2 April 2019, businesses with a turnover from $10 million to less than $50 million can also use the instant asset write-off.
Remember, registered tax agents can help you with your tax.
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