Instant Asset Write-Off - Whats New?
BOSS LADIES AND GENTS: The Instant Asset Write-Off (IAWO) threshold change welcoming news for business owners
Did you know the Federal government has announced several stimulus packages in an aim to keep our economy above water during these uncertain times? Recently, it was announced that there will be a massive increase of the Instant Asset Write-Off (IAWO). The IAWO went from $30,000 to a whopping $150,000! This is some welcome news for business owners for sure.
Now the important question is: how do I apply? Not surprisingly, there are conditions eligibility criteria. To save you the need to scavenge through multiple websites to learn the key facts that will
help you take advantage of this fantastic initiative, simply continue reading.
To put it simply, what is it?
The $150,000 is sadly not going to suddenly appear in your bank account as a cash deposit. Rather, it’s a tax deduction that will reduce your overall tax bill. This means that you can immediately deduct purchases of eligible assets each costing less than $150,000 from your taxable income. The threshold applies on a per asset basis, so eligible businesses can immediately write-off multiple assets.
Who can get it? How do I find out if I’m eligible?
Eligibility to use Instant Asset Write-Off depends on a number of factors. Your aggregated turnover (the total ordinary income of your business and that of any associated businesses), the date you purchased the asset and the date it was first used or installed ready for use. The item/s must be purchased and first used or installed ready for use between 12 March 2020 and 30 June 2020, with the cost of each asset being less than threshold. Click here to see them - https://www.ato.gov.au/Business/Depreciation-and-capital-expenses-and-allowances/Simplerdepreciation-for-small-business/Instant-asset-write-off/#Thresholds
The criteria have changed over time so make sure you check whether your business is eligible. From July 1st 2020, the Instant Asset Write-Off will be available only for small businesses with a turnover of less than $10 million and the threshold will be $1,000. Note that businesses with a turnover of $500 million or more are not eligible to use Instant Asset Write-Off.
What CAN I purchase that can be written off during tax time?
• New or used vehicles
• Vehicle accessories
You can also claim the IAWO on a vehicle that you use for both business and personal use. However, you can claim only the proportion that will be used for business purposes.
What CAN’T I claim?
Unfortunately, as much as we all would like to go a buy a brand-new Lamborghini as our corporate car, or a Hummer to get to your tools to work in style, you cannot claim IAWO on cars designed to carry passengers. The definition of a “car” for tax purposes is a motor vehicle designed to carry fewer than nine passengers and a load of less than one tonne.
We hope this new information has made you excited and already planning one of the next upgrades you need for your business. Maybe those items in your Bunnings wish list or carsales.com are going to become a reality much sooner than you thought! Have fun shopping, folks.
To find out more details about this initiative, click here: https://www.business.gov.au/Riskmanagement/Emergency-management/Coronavirus-information-and-support-forbusiness/Increasing-the-Instant-Asset-Write-Off
Disclaimer: The above commentary is provided for general information purposes only and does not constitute taxation and financial advice. It should not be relied upon for the purposes of making financial decisions. Individuals are advised to consult an appropriately qualified practitioner to obtain advice relevant to their specific circumstances