BREAKING: Government’s $150K instant asset write-off scheme extended until the end of year
Today (9th June) Treasurer Josh Frydenberg confirmed the program will now last a further six months, until December 31, at a cost of $300 million. It is expected to help around 3.5 million Aussie businesses. (News.com.au)
As per our below post, this was originally due to end on July 1, but amidst the coronavirus pandemic millions of businesses have faced a very tough time and the extensions is a $300million helping hand from the Government.
Original Post (Posted 29th May 2020 - No longer relevant)
The $150,000 instant asset write-off will soon revert to its original threshold of $1,000 in just over four weeks, with businesses urged to consider the measure ahead of the end of the financial year.
Under instant asset write-off, eligible businesses can claim an immediate deduction for the business portion of the cost of an asset in the year the asset is first used or installed ready for use.
Instant asset write-off for eligible businesses
Early March 2020, our jaws dropped as the government announced a HUGE increase to the instant asset write-off, rising from $30,000 to $150,000 as part of the coronavirus stimulus package. They also expanded the access to businesses with an aggregated turnover of less than $500 million, 10 times more than the previous $50 million limit.
However, the increased and expanded measure will only run until 30 June 2020, before reverting to its legislated $1,000 threshold and reduced eligibility to small businesses with a turnover of less than $10 million at EOFY (Accountants Daily).
The drop from $150,000 to $1,000 is very significant, and the opportunity will be unlikely to be repeated. The current climate for small biz from COVID-19 has definitely impacted the number of those who are able to take advantage of it. You have to have the money to pay for the asset and have it installed and ready for use by 30 June 2020, so for most small businesses, they are opting to be conservative and save their cash.
“Often, more expensive assets have a longer lead time between order and delivery/installation, so businesses that want to claim the deduction need to get their orders in. If they have an order made, they will need to watch the date of delivery, particularly with all of the COVID-19 global delivery and manufacturing issues.” - Tax & Super Australia senior tax counsel John Jeffreys.
For those who are considering purchasing a car, the ATO has reminded that the instant asset write-off will be limited to car limit of $57,581 for the 2019–20 income tax year, with the excess cost unable to be claimed under any other depreciation rules.
If you are wanting to take advantage of this offer before it disappears (seemingly forever), we urge you to read the full details (especially eligibility and limitations) on the ATO website, available here, and get your orders in.
Don't forget - There's an array of different tax saving and minimisation strategies outside of the instant asset write off that you can take advantage of before EOFY. Enter your email below to instantly download our fact sheet outlining more strategies for you to consider!
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Amy is one of our senior accountants operating in our Townsville and Mount Isa offices. She has a Bachelor of Accounting from Central Queensland University and is also a Chartered Accountant.
Amy can help you in all things Cloud Accounting, Tax, Advisory for SMEs and more.