Understanding the Instant Asset Write-Off

The Instant Asset Write-Off is a huge benefit to many businesses, which is why it’s surprising and unfortunate that nearly 50% of all Australian small business owners are unaware of the Federal Government’s initiative.

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What is an Instant Asset Write-Off?

An instant asset write-off allows business owners to claim instant and full deductions of up to a certain, limited amount for purchases of business-related assets, including vehicles, office equipment, and tools, among others. The items can either be brand-new or second hand.

Who is eligible for it?

Previously, the instant asset write-off was only available to small businesses with a turnover of up to $10 million. However, in a recent federal announcement, the eligibility criteria have been extended to medium-sized businesses with annual revenues of $50 million or less.

More than 350,000 Australian businesses have benefitted from the instant asset write-off scheme to date.

How much asset can be written off?

Immediate and full deduction can be claimed for any business-related purchases of assets up to a value of $30,000. This is the second boost to the instant asset write-off, which has already been increased from $20,000 to $25,000 in January 2019.

What type of assets can be written off?

Whilst there is no limit to the number of assets that can be claimed, there are some assets that do not qualify, such as those leased to another party, horticultural plants, and more.

What happens if I purchase an asset that is greater than the write-off amount?

Any and all assets costing more than the threshold of $30,000 can be put into your small business asset pool or general depreciation rule, depending on your business turnover. This will enable you to claim gradual deductions each year.

When is the cut-off date for the scheme?

In order for assets to be written off, they must be purchased and first used, or installed and ready for use, before June 30, 2020.

More info

The information provided by Envirofluid about the instant asset write-off scheme is of a general nature, so it’s best to visit the Australian Taxation Office website for more detailed information. We also recommend speaking with a qualified tax professional or accountant before making any decisions.

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