Instant Asset Write Off Tax Deduction for Small Business

What is the Instant Asset Write off tax deduction?

A Small businesses can claim an instant tax deductions for any assets costing less than cost limit for that financial year. The limit is on a per asset basis so you can buy a number of assets and as long as each asset is valued under limit for that financial year, you will qualify for an immediate deduction.

What is the cost limit?

Please not the Cost Limit per asset is excluding GST

7:30pm (AEDT) 02/04/2019 to 30/06/2020 $30,000

29/01/2019 to before 7.30pm (AEDT) 02/04/2019 $25,000

7.30pm (AEST) 12/05/2015 to 28/01/2019 $20,000

01/01/2014 to prior to 7.30pm (AEST) 12/05/2015 $1,000

01/07/2012 to 31/12/2013 $6,500

01/07/2011 to 30/06/2012 $1,000

What is a small business?

A Small business is one with a turnover of less than

up to 30 June 2015 $2 million per annum.

From 1st July 2015 $10 million per annum

What assets does this apply to?

Any new or second hand assets purchased after 7.30pm on 12 May 2015.

What happens to assets that are more than the cost limit?

Those assets will be pooled and you will be eligible to claim a 15% in the first year and 30% every year thereafter until the asset is fully depreciated.

What assets can you buy?

Assets that are eligible include:

  • Office Furniture
  • Shop fit outs
  • Tools, equipment and machinery
  • Work vehicles, Utes, cars and vans
  • IT Equipment, including computers, printers, scanners and photocopiers

What assets are not included?

There are a number of assets that aren’t eligible such as:

  • Horticultural plants as they have their own specialised depreciation rules
  • Capital works which are subject to their own ‘capital works’ depreciation rules; and
  • Assets allocated to a low-value or software depreciation pool which are subject to the depreciation rules under those pools.

Important Considerations

It is important to discuss the following with your adviser at XO Accounting:

Does your business satisfy the “Small Business test”?

Review your business’ financial position and whether there is any benefit. For example, if your business is not making a profit then a tax deduction is not beneficial. If your business is expected to make a profit next year or the year after? Then it may better to wait to use the tax deduction in those years.

Are you borrowing money to buy asset? Cash flow and financing costs need to be taken into consideration. In other words can you afford the purchase the asset and is it really needed in the business.