It’s been a confusing time for small businesses since the $30,000 instant asset write-off was announced in early April during the federal budget speech. Offering a great opportunity to make larger investments for their businesses while claiming tax depreciation, however, not everyone is entirely sure of whom or what is eligible for the new write-off. So, in this article, we are debunking the myths of the instant asset write-off, revealing the truths behind all the new changes.
Only small businesses can claim the write-off
False – While it used to be that the write off was only eligible to small businesses with a turnover of less than 10 million per annum, the government has extended the eligibility to medium-sized businesses with a turnover of less than $50 million. This new rule applies from 2nd April to 30th June 2020. It’s great news for small and medium businesses that are growing and contributing to the economy.
It is only eligible for one purchase per financial year
False – More good news for us! Small businesses can now purchase multiple assets in the same financial year. Yet they must be priced under the $30,000 and installed or ready for use before 30th June 2020.
You can’t claim the 30k for something purchased before April
True – If you’ve purchased an asset before 6th April (the date the new write-off was legislated) than you can’t apply for the $30,000 instant asset write-off. However, you are still eligible for the $25,000 write-off which was implemented after 19th January 2019. In addition, purchases made before 19th January are eligible for the $20,000 instant asset write off.
The instant write off is only eligible for certain purchases
This one is a bit tricky – While there is a check on what it can be applied to, what it is eligible for is still quite a vast list. The asset must be a depreciable asset purchased for own business use. For example, a vehicle or office equipment such as printers, computers etc. However, the write-off also covers assets like software, patents, investment on websites and digital technology among others.
You can only purchase new assets
False – We can absolutely purchase second-hand assets as long as they are meant for business purposes and cost under the $30,000 threshold
You can’t resell the asset
True – Business owners can’t purchase something with the intention of selling it, as it then becomes part of your trading stock. These assets must be used for your own business once they’ve been purchased.
In this day and age, it’s important that business owners continue to grow and evolve. With the help of the increased write-off, it is essential that we take our businesses online and create a strong presence that will enable our brands to flourish. But, if you’re aren’t quite tech-savvy and need help with building a website or creating a bespoke digital strategy to drive more leads to your site, Netstripes offers free one-on-one Advisory Sessions to help you get started. Books yours today!
Please speak to your tax accountant for all tax and investment related advice. Information provided above does not constitute advice.