Instant Asset Write-Off for Businesses

Written By Vincent Villafranca

What is the Instant Asset Write-Off?

The instant asset write-off incentives allow eligible businesses to claim an immediate deduction for certain costs relating to depreciating assets.

Business owners or sole traders are eligible. If you're an employee of a business, you are not eligible.

These incentives encourage eligible businesses to invest in equipment and other revenue-making assets to help grow their business and sales, employ more people and in turn stimulate the Australian economy. These incentives apply to:

  • multiple assets, if the cost of each individual asset is less than the relevant threshold

  • new and second-hand assets.

For assets first used or installed ready for use between 12 March 2020 until 30 June 2021, and purchased by 31 December 2020, the instant asset write-off:

  • threshold amount for each asset is $150,000 (up from $30,000)

  • eligibility extends to businesses with an aggregated turnover of less than $500 million (up from $50 million).

What Your Business Can Now Claim

From 7.30pm AEDT on 6 October 2020 until 30 June 2022, temporary full expensing allows a deduction for:

  • Unlimited number of new eligible assets of any dollar value (and eligible asset improvements for new and existing assets), if your business has an aggregated annual turnover of less than $5 billion

  • If your business has an aggregated turnover of less than $50 million, the full cost of all eligible second-hand assets may also be claimed

  • the balance of a small business pool at the end of each income year in this period for businesses with an aggregated turnover under $10 million

Vista TAX TIPS

  • Plan ahead for your business, anticipate the purchase of future business assets and bring your plans forward to purchase while this incentive is still around

  • Free up your cash flow and apply for a loan to finance your business assets. You may be able to borrow using the equipment you purchase as security with no deposit required and no monthly fees

  • Take advantage of the current low interest rates. Interest expense is tax-deductible

Get in contact with us and let us help you work out your eligibility for these government incentives and maximise your tax savings.

Vincent Villafranca
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