Instant Asset Tax Write Off COVID-19 Edition: Explained for Your Business

Updated on : 29 June 2020

The $20,000 instant asset write off for small businesses, introduced in 2015/16 federal budget and consecutive federal budgets since has been very popular among small business owners. A further increase saw it raised to $30,000 and now the current Morrison Government recently announced to increase it further to $150,000 amid the recent global coronavirus COVID-19 pandemic in an attempt to support over 3.5 million businesses that employ more than 9.7 million people. 

Since the recent coronavirus pandemic has added more risk to businesses, the health of individuals, and the Australian economy as a whole, the move announced recently aims to deal with the growing economic concern.   

Announced on 12th of March, this stimulus package will worth more than $17.6 billion of tax breaks and subsidies to small and medium businesses. The package aims to offer cash flow opportunities for small companies to reinvest back into their businesses and to help Australians keep their jobs. 

Announced on 12th of March, this stimulus package  will worth more than $17.6 billion of tax breaks and subsidies to small and medium businesses.

What Is An Instant Asset Write Off?

Unlike regular deductions you make after purchasing for your business, the $150,000 instant asset write off aims to speed up the rate at which you can claim as tax-deductible for your purchase. It allows small business owners to claim the tax deduction in the same income year the assets are purchased.

Eligibility

 With the write-off threshold increased from $30,000 to $150,000, the Government has widened the eligibility criteria of the business. It now includes firms with a turnover of up to $500 million, up from $50 million. Assets eligible for write off include extra equipment, machinery, computers, vehicles, and office fit-out and furniture.

The purpose of the instant write off is to increase the speed at which the business can make deductions for those purchases. It would encourage business owners to bring forward the investment spending that they instead were planning to invest in the future. Businesses had until 30 June to utilise this incentive, but the deadline is since extended till the end of 2020.

For Partially Used Assets

If a business uses the asset partly for its operations, then only the business portion of the cost can be claimed as a tax deduction. You can only write off the equivalent percentage used for business use. For example, if you buy machinery for your business and use 80 per cent for your business and 20 per cent for personal use, then you will only be able to claim the instant asset write off for only 80 per cent of the asset worth.

Is It A Good Time To Make An Investment? 

It might be a good time to consider investing in business assets you require and take advantage of instant write-off if your business has sustainable cash flow and you can get your asset operational by the cut-off date of 31st December 2020 (extended from the previous deadline 30th June 2020). Consult with your accountant for specific information in regards to your situation. 

Get Started With Office Fitouts

If you have been thinking of installing an office fit-out or upgrading furniture in your business, then this might be the right time to do it. Interia Systems provides quality premium office furniture and Office fit-outs in Perth for businesses of all sizes and industries whether it be for commercial office space, school, government, medical facility or a warehouse. Contact us with your requirements, and we will deliver the best solution for you. 

For More Information:

Australian Taxation Office

The Instant Asset Write-Off (IAWO) Threshold