$150,000 instant asset write-off set for significant drop

Announced in March 2020 as part of the government’s stimulus package in response to the Corona Virus, the instant asset write-off threshold was increased, rising from $30,000 to $150,000.

In just over 4 weeks (30 June 2020), the $150,000 instant asset write-off will soon revert to its original threshold of $1,000, with businesses urged to consider the measure ahead of the end of financial year.

Examples of potential purchase scenarios can be accessed by clicking here.

As part of the roll-back, eligibility will also be reduced to small businesses with a turnover of less than $10 million.

While the write-off had been extended on a yearly basis in previous budgets, the postponement of this year’s budget to October has raised uncertainty over the future of the incentive.

The drop from $150,000 to $1,000 is significant, the opportunity is unlikely to be repeated. You may not be able to use up all of the tax deduction in the current financial year, but if you return to profitability in the year ending 30 June 2021, it can be a welcome tax deduction to help you with your tax bill.

For businesses that utilise the instant asset write-off, the asset will need to be used or installed ready for use by 30 June 2020.

More expensive assets can have a longer lead time between order and delivery/installation, businesses that want to claim the deduction will need to place their orders as soon as possible or risk missing out.

If an order for an asset as part of the scheme is in place, the date of delivery is crucial, particularly with COVID-19 global delivery and manufacturing issues.

If you are considering purchasing a car for instance, 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.

Further information can be sourced via the link below, please contact Holmans if you have any queries.


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