{"id":384,"date":"2020-06-05T16:49:17","date_gmt":"2020-06-05T08:49:17","guid":{"rendered":"https:\/\/www.thehorizongroup.com.au\/blog\/?p=384"},"modified":"2020-06-14T16:51:08","modified_gmt":"2020-06-14T08:51:08","slug":"instant-asset-write-off","status":"publish","type":"post","link":"https:\/\/www.thehorizongroup.com.au\/blog\/instant-asset-write-off\/","title":{"rendered":"Instant Asset Write-off ~ can I get it?"},"content":{"rendered":"\n
The increase to the instant asset write-off to $150,000 has been extended to 31 December 2020 as part of the Government Stimulus Package. <\/p>\n\n\n\n
The instant asset write-off\u00a0helps to\u00a0improve\u00a0cash flow\u00a0for businesses\u00a0by bringing forward tax deductions for eligible expenditure.<\/span><\/p>\n\n\n\n
What is it?<\/span><\/h4>\n\n\n\n
The instant asset write off means that qualifying businesses can claim a tax deduction for each asset purchased and first used or installed ready for use by specific dates & up to the amounts below.<\/p>\n\n\n\n
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If you run a business and choose to use the simplified depreciation rules, you\u00a0must\u00a0use instant asset write-off on all eligible assets.<\/p>\n\n\n\n
Eligibility criteria<\/span><\/h4>\n\n\n\n
Businesses with total ordinary income of your business and that of any associated businesses is less than $500 million (after 12 March)<\/p>\n\n\n\n
The date you purchased the asset<\/p>\n\n\n\n
When it was first used or installed ready for use<\/p>\n\n\n\n
The cost of the asset being less than the threshold (see above)<\/p>\n\n\n\n
Common questions answered<\/span><\/h4>\n\n\n\n
If your business has a small profit or even a loss, the write off will be of little or no benefit in the current year (losses are not refundable but can be carried forward to the next year)<\/li>
The asset can be new or second hand<\/li>
To be eligible, the asset must be purchased by a business turning over less than $50m or $500 million after 12th March 2020 (see above)<\/li>
The amount of the asset must be under $150,000 (depending on date of purchase \u2013 could be $30K or $25K or $20K) exclusive of GST (i.e. $165,000, $33K, $27.5K or $22K including GST)<\/li>
If you borrow to purchase the asset, the asset is still eligible<\/li>
The asset must be installed and ready to use by the deadline<\/li>
Note: purchasing a car or equipment to be delivered in July 2020 or later won\u2019t qualify until the car is actually delivered or equipment is installed ready for use (see example below)<\/li>
To claim the write off on a motor vehicle you will need to have a valid log book and claim only that percentage of the cost as an immediate write off<\/li>
If you purchase a car for your business, the instant asset write-off is limited to the business portion of the car limit of $57,581 for the 2019\u201320 income tax year<\/li>
Trade-ins will form part of the asset cost and does not reduce the cost of the asset<\/li>
Building structural improvements are not eligible for the instant write off<\/li>
If your pool balance at the end of the year is less than $30,000 before applying any other depreciation deduction, the entire pool balance can be written off ($150,000 if purchased post 12th March 2020)<\/li><\/ul>\n\n\n\n
Common types of assets in business<\/span><\/h4>\n\n\n\n
Motor vehicles, equipment, plant, computers, furniture, tools etc<\/p>\n\n\n\n
Excluded assets<\/strong><\/span><\/h4>\n\n\n\n
You must use the general depreciation rules for the following depreciating assets \u2013 as they are specifically excluded from the simplified depreciation rules:<\/p>\n\n\n\n
assets that are leased out, or expected to be leased out, for more than 50% of the time on a depreciating asset lease<\/li>
assets you allocated to a low-value assets (pool) before using the simplified depreciation rules<\/li>
horticultural plants including grapevines<\/li>
software allocated to a software development pool (but not other software)<\/li>
capital works deductions<\/li><\/ul>\n\n\n\n
Motor Vehicles<\/strong><\/span><\/h4>\n\n\n\n
If you purchase a car (a passenger vehicle, except a motor cycle or similar vehicle, designed to carry a load less than one tonne and fewer than nine passengers) for your business, the instant asset write-off is limited to the business portion of the car limit of $57,581 for the 2019\u201320 income tax year.<\/p>\n\n\n\n
To claim the write off on a motor vehicle you will need to have a valid log book and claim only that percentage of the cost as an immediate write off For example, if you use your vehicle for 75% business use, the total you can claim under the instant asset write-off is 75% of $57,581, which equals $43,186<\/p>\n\n\n\n
![\"Instant](\"https:\/\/www.thehorizongroup.com.au\/blog\/wp-content\/uploads\/2020\/06\/writeoff.png\")
<\/figure><\/div>\n\n\n\n![\"MV](\"https:\/\/www.thehorizongroup.com.au\/blog\/wp-content\/uploads\/2020\/06\/MV-depn.jpg\")
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