Announced as part of the 2019 Federal Budget, the $30,000 instant asset write-off for small business that was supposedly expired on 30th June 2019 will be extended for YET ANOTHER YEAR another year till the 30th June 2020. For all SMEs, this is extremely big news!
With more than 2.1 million small businesses in Australia, it’s great to see the Australian Government offering financial support to the backbone of the Australian economy.
Prime Minister of Australia Scott Morrison believes that the additional 12 months will assist with small business’ cash flow, “providing a boost to small business activity and investment for another year”.
If you’re a small business, you would definitely want to take advantage of this tax break, because on the 1 July 2020, this threshold will reduce from $30,000 to $1,000!
(All information has been updated as of 4th April 2019.)
What is the $30,000 Instant Tax Write-Off?
Introduced in 2015, this scheme has allowed small businesses to claim instant asset purchases up to $20,000, however as of 2nd April 2019, the Morrison Government has increased the threshold to $30,000, and expanded the eligibility criteria from $10m to $50m in annual revenue, meaning medium businesses also have access to this scheme.
As an SME, you can benefit from this by writing it off the business portion in the tax return for the relevant income year.
Am I Eligible for the Instant Asset Write-Off?
If you’re a small or medium business with a turnover of less than $50 million, you may be eligible for the tax deduction scheme. Instead of depreciating your asset purchases over time using the small business asset pool, the ATO’s Instant Tax Write Off allows small businesses to instantly deduct assets valued up to $30,000, that are purchased for business use.
If you have purchased assets that were valued more than $30,000, you can put this into a small business asset pool to claim gradual amounts each year.
Any Additional Requirements?
→ The cost of the Asset must be $30,000 or less (inclusive of GST). If you have registered for GST and have claimed it back, the GST will not be included in the threshold.
→ It is possible to claim multiple assets, provided that each asset is less than $30,000.
→ The asset must be purchased and installed before the 30th June 2020.
→ If assets are purchased for both business and personal use, you can only claim the business portion. For example, you purchased a vehicle for $30,000 and only use it 50% of the time for business, you would only be able to claim back $15,000 under the instant write off scheme.
→ The instant asset write-off is a one-time deduction. Depreciation on the assets cannot be reclaimed in the following tax years. Penalties apply if repetitive deductions are attempted
If you have any further questions, registered tax agents, BAS agents, and other trusted financial advisers can assist in providing you professional advice to ensure both you and your small business will benefit. This scheme won’t last long, so speak to your registered tax agent or trusted financial adviser and benefit from this today.
What are our thoughts for Small Businesses?
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(All information has been updated as of 4th April 2019.)
Disclaimer: This blog is for information purposes only and does not constitute advice. Remember, registered tax agents and BAS agents can advise you correctly on this matter.
Any questions?
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