Instant Asset Write Off

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Instant Asset Write Off

Due to the Corona Virus epidemic, the instant asset write off has been increased from $30,000 to $150,000 for businesses with a turnover of less than $500m. 

Assets must meet the following criteria:

  • Must be a business asset eligible for normal depreciation rules
  • Be purchased after 12 March 2020
  • Installed ready for use before 30 June
  • Cost less than $150,000 excluding GST
  • Does not have to be brand new, the asset write off is applicable to second hand items

The $150,000 limit is per each individual asset, for example purchasing a truck and a machine together will be treated as two separate assets. 

How will the Instant Asset Write Off Affect My Business? 

Usually larger asset purchases will be depreciated over a number of years. This instant asset write off will allow assets to be depreciated quicker giving the business a reduction of income tax that would normally be payable.

An example of this is a business with a tax rate of 30%, a purchase of $100,000 may save the business $30,000 off their tax bill. 

If the business is not profitable (running at a loss) than the losses will be carried forward to offset future profits.

Is this Instant Asset Write Off Available For A Motor Vehicle Purchase? 

Short answer, Yes. The instant asset write off is available for motor vehicle purchases, however currently there has been no mention of increasing the Motor Vehicle Cost Limit, which restricts the total amount of depreciation and GST claimable on the acquisition.  Currently the Yearly Car Limit for 2019-20 Financial Year is $57,581.00. You can find out more about there on the ATO website here.

How long will this be available?

The $150,000 asset write off will only be available until 30 June 2020 where the threshold reduces to $30,000 for small businesses up to $10m annually and $1,000 for business trading up to $500m annually. 

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