Businesses: Lower your tax with the instant asset write-off

Before this year’s budget the government announced an extension to the instant asset write-off, both in terms of amount and date. The threshold increased from $20,000 to $25,000 in January but the decision was made to again raise it to $30,000. The date has also been extended for assets that are installed ready for use before 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.

It’s important to note that this is not a full refund of the purchase price, it is an immediate tax deduction which reduces the tax payable by the business. So, don’t be buying assets you don’t need but if the business is needing that particular asset, then consideration should be given to buying it and having it ready for use prior to June 30 this year to reduce this year’s tax.

Highview instant asset tips:

  1. Don’t buy it if the business doesn’t need it
  2. If the purchase includes multiple items that are each under $30,000 but together over $30,000 make sure the items are separated on the invoice so they can be individually written off
  3. The $30,000 is net of GST and applies to the business use portion

As always, please get in touch with your trusted Highview adviser before making large purchases.

Happy EOFY!

Article written by Highview Prahran Director & CPA, Simon Byers.