Instant Asset Write-Off Extended & Increased

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The Prime Minister has announced an extension of the instant asset write-off to 30 June 2020, with an increase from the current $20,000 to $25,000 effective from 29 January 2019.

The increase to $25,000 is yet to make it through the parliamentary process. However, previous alterations to this area of tax have made it through parliament without any amendments.

The instant asset write-off means that a small business can claim a deduction for assets costing less than the threshold. In the past, assets of this size needed to be written off over a number of years as depreciation.

F.A.Q regarding the current $20,000 instant asset write-off.
Does this mean I can get up to $20,000 back from the ATO on each asset I buy?

Unfortunately, no. You will not get the full cost of the purchase back from the ATO but you will get a reduction in your taxable income which will reduce the tax you pay depending on which tax bracket you sit in.

So what can you claim an instant deduction for?

The deduction is primarily intended for physical assets. Equipment, vehicles, tools and electronics (such as computers and phones) can all be claimed as part of the scheme. If unsure, check with your Accountant or contact us for more information on your individual circumstances.

What about assets that are also used personally?

If you buy an asset for your business that you also use personally, you can only write-off the equivalent percentage that is used for business purposes. As an example, if you were to buy a $20,000 ute for your carpentry business, that 60% of the time was used for business purposes, and 40% of the time was being used for personal purposes, you would only be eligible to write off $12,000 (the 60% of the total asset cost).

What assets are excluded from the instant deduction?

Whilst most assets are included, there are a number of asset classes or types that the ATO has excluded from the scheme. These include:

  • Assets that are leased out for more than half of the time on a depreciating asset lease
  • Assets already allocated to a low-value pool
  • Horticultural plants, including grapevines – these are covered by specialised deductions
  • Capital works
  • Software
Does every “Small Business” qualify? 

The write off is available to small businesses with an aggregate turnover of less than $10 million.

If you would like to go through the matter with us further, please do not hesitate to contact us on 03 9727 6700 or email us at info@fieldgroup.com.au

This document contains general advice only and is prepared without taking into account your particular objectives, financial circumstances and needs. The information provided is not a substitute for legal, tax and financial product advice. Before making any decision based on this information, you should speak to a licensed financial advisor who should assess its relevance to your individual circumstances.  While The Field Group believes the information is accurate, no warranty is given as to its accuracy and persons who rely on this information do so at their own risk. The information provided in this bulletin is not considered financial product advice for the purposes of the corporations Act 2001.

About the author

The Field Group is composed of experts in the fields of Xero accounting, personal tax, self-managed superannuation, audit services, business services, bookkeeping, bench marking, business structuring and ATO Compliance. Based in Melbourne, The Field Group are also able to work with clients all over Australia and are the market leader for accounting services in the Ringwood, Croydon, Chirnside Park, Lilydale and general Melbourne eastern suburb region.

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