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$150,000 instant asset write-off for eligible businesses

 

With the government  increasing the instant asset write-off threshold (IAWO) from $30,000 to $150,000 many more businesses around Australia will have access to the support measures that provide them with the cash flow to invest in assets they require to succeed now and into the future.

The higher IAWO threshold provides cash flow benefits for businesses that will be able to immediately deduct purchases of eligible assets each costing less than $150,000.

The threshold applies on a per asset basis, so eligible businesses can immediately write-off multiple assets. It also applies to both new and used assets, so long as the assets have been purchased in the current financial year.

The IAWO is applicable until the 30 June 2020 for assets first used or installed ready for use in this timeframe and is due to revert to $1,000 for small businesses (turnover less than $10 million) as of 1 July 2020.  

Eligibility

Eligibility to use instant asset write-off depends on:

  • your aggregated turnover (the total ordinary income of your business and that of any associated businesses)
  • the date you purchased the asset and it was first used or installed ready for use
  • the cost of each asset being less than the threshold.

The Government is expanding access so that more businesses can take advantage of the IAWO. The annual turnover threshold for businesses is increasing from $50 million to $500 million. Expanding the threshold will mean an additional 5,300 businesses who employ around 1.9 million Australians will be able to access the IAWO for the first time.

In order to be eligible for the instant asset tax write-off, assets must meet certain eligibility criteria:

  • Entire cost of the asset must be less than $150,000 (from 12 March 2020) or $30,000 (before 12 March 2020), not just the business-use portion and inclusive of GST
  • Asset can be new or used
  • Asset purchased was first used or installed and ready to use in the income year you're claiming it in

Timing

This applies from 12 March 2020 until 30 June 2020.

How to apply

To claim the IAWO, you need to make the purchase and use the asset for your business in the same year that you claim the deduction.

Exclusions and limits

There are a small number of assets that are excluded. You can find more information about these here.

In addition, if you purchase a car for your business, the instant asset write-off is limited to the business portion of the car limit of $57,581 for the 2019–20 income tax year. You cannot claim the excess cost of the car under any other depreciation rules. A worked example can be found here.

More information regarding the IAWO can be found in the links below.

ATO

Business.gov

Treasury