Instant Asset Write-Offs in 2020

If you are looking into whether an instant asset write-off is something that your business could benefit from in 2020, make sure you do a little research first. The Government has announced changes to a few different aspects of the process, allowing it to benefit more businesses.

We have put together some of the information and resources below however If you would like further help, give our Sunshine Coast Accountants a call (07) 5471 7077 today.

What is an instant asset write-off?

An instant asset write-off relates to immediately claiming a tax deduction for particular assets your business may have purchased for commercial uses.

For information as to how an instant asset write-off works, head to How Does Instant Asset Write-Off Work?

How have instant assets changed in 2020?

In an effort to assist businesses with Coronavirus and the effect it has had on the economy - both nationally and globally - the Australian Government have altered a few things when it comes to instant asset write-offs to 30 June 2020. For an example of how these changes could help a business, head to the Delivering support for business investment Factsheet from the Australian Treasury.

Increased threshold amount due to Coronavirus

The instant asset write-off, otherwise known as the IAWO, threshold has been increased from $30,000.00 to $150,000.00 until 30 June 2020 due to the Coronavirus Pandemic. This increase offers cash flow benefits for eligible businesses who will be able to immediately deduct purchases of eligible assets each costing less than $150,000.

The increased threshold applies on a 'per asset' basis, meaning eligible businesses can immediately write-off more than one asset. The IAWO will decrease to $1,000 for small businesses, ie. those with a turnover of less than $10 million, from 1 July 2020.

Altered eligibility

In addition to the increasing of the IAWO threshold, the eligibility for instant asset write offs has also expanded. The annual turnover threshold for businesses is increasing from $50 million to $500 million, meaning all businesses with an aggregated annual turnover of less than $500 million are eligible until 30 June 2020.

Applicable assets

All new or second-hand assets first used or installed ready for use between 12 March 2020 and 30 June 2020 are eligible, as long as they fall under the relevant threshold amount.

If you would like further assistance in relation to instant asset write-offs, give our Sunshine Coast Accountants a call (07) 5471 7077 and we would be happy to help.

For more information, head to Your Guide to Small Business Depreciation.

Resources:

Australian Government - Treasury (Delivering support for business investment) : https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Support_for_business_investment.pdf

ATO (Instant asset write-off) : https://www.ato.gov.au/Business/Depreciation-and-capital-expenses-and-allowances/Simpler-depreciation-for-small-business/Instant-asset-write-off/

Business.gov.au (Corornavirus - Increasing the Instant Asset Write-Off) ; https://www.business.gov.au/Risk-management/Emergency-management/Coronavirus-information-and-support-for-business/Increasing-the-Instant-Asset-Write-Off

*Please note, this guide is broad in nature and may not suit your exact circumstances. Always speak to a professional when it comes to individual and business financial matters before making any decisions.