Foresiight

Instant Asset Write-Off Explained

Have you heard of the Federal Government’s instant asset write-off?

If you haven’t, don’t panic. Recent research by American Express revealed almost half of Australian small business owners are unaware of this initiative and how it can help.

Here’s a quick rundown on the instant asset write-off and whether it’s something you should take advantage of.

From the 2nd April 2019, the ‘Instant Asset Write-Off’ has increased to $30,000. This means that any capital purchases such as computer equipment or hardware and some software purchases can be instantly deducted if acquired between the 2nd April and 30th June in this financial year (rather than over the useful life of the asset).

Computer equipment such as servers, workstations, handheld devices, printers and scanners can all fall under the instant asset write-off.

Certain software purchases are also eligible, but the criteria is a little less clear-cut so we would advise speaking to your accountant about exactly what qualifies under the instant asset write-off.

For more information, see the below article published by the Australian Tax Office.

Instant asset write-off increased and extended

The threshold has increased to $30,000, and has been extended to 30 June 2020. The instant asset write-off now also includes businesses with a turnover from $10 million to less than $50 million. These businesses can claim a deduction of up to $30,000 for the business portion of each asset (new or second hand), purchased and first used or installed ready for use from 7.30pm (AEDT) on 2 April 2019 until 30 June 2020.

Businesses with a turnover of up to $10 million can also claim a deduction for each asset purchased and first used or installed ready for use, up to the following thresholds:

  • $30,000, from 7.30pm (AEDT) on 2 April 2019 until 30 June 2020
  • $25,000, from 29 January 2019 until before 7.30pm (AEDT) on 2 April 2019
  • $20,000, before 29 January 2019.

Your business clients can’t immediately claim a deduction for individual assets that cost $30,000 or more. They can continue to deduct these over time using the small business pool or the general depreciation rules, depending on their turnover.

For the above article: Click here

For details and examples of the instant asset write-off scheme: Click here

For info on deductible software: Click here