How small businesses can benefit from the $30K instant asset write-off

This year’s Federal Budget raised the instant asset write-off level for businesses to $30K. So, what difference does it make and how can small businesses maximise its impact? We explain.

As a small business owner, you’ll know only too well that spending money on new assets is always a carefully thought-out decision. And rightly so – asset purchase is a big deal. The 2019 Federal Budget saw two significant changes to the instant asset write-off scheme, which means that now there may be an even greater incentive for you to invest this financial year.

Key take outs:

    1. The ‘per asset threshold’ has increased from $20,000 to $30,000. This means you can instantly claim a 100% tax write-off for the tax year of eligible purchases, as opposed to claiming deductions over a number of years.
    2. The aggregated turnover threshold for businesses to access the higher $30,000 threshold has also been increased – from a turnover up to $10 million to up to $50 million.

This means you may be able to use the scheme to help grow your business and, ultimately, lower your taxable income.

What you need to know

The Australian Tax Office (ATO) says that businesses can instantly write-off assets if:

  • The asset costs no more than $30,000 (excluding GST, if both businesses involved in the transaction are GST registered) and was purchased between 7.30pm on 2 April 2019 and 30 June 2020.
  • The business has an aggregated group turnover of no more than $50 million.
  • The asset was first used or installed in the same financial year as the claim.

According to the ATO, there’s no limit on the number of individual assets that can be claimed via the instant asset write-off scheme (the $30,000 threshold is not a cumulative total) and it can be used on anything that relates to your business, such as office equipment, vehicles, tools and electronics. What’s more, assets can be purchased new or used. As for any purchases that exceed the $30,000 threshold, you can still write them off over a prolonged period of time by adding them to your pool of small business claims and depreciating as normal. Of course, any asset purchase should be in line with your overall business plan and strategy. Speak to your financial advisor for advice that suits your individual needs. If your business is structured as a partnership, the ATO says that all purchases made under the instant asset write-off will be owned by the partnership and not by individual partners. That means if one partner buys a new vehicle in their own name, it likely won’t be eligible for the write-off as part of the partnership, and if one of the partners fails to qualify as a small business taxpayer personally, they may not be eligible for the write-off either.

Looking to the future

According to the Council of Small Business Organisations of Australia (COSBOA), this year’s budget was “one of the best in recent memory in that it focuses on the four core ingredients of economic growth: increasing disposable income; improving workforce skills; improving infrastructure; and encouraging business investment.” So, if you’ve been considering investing in new assets for your business, now could be the time to act.

The information on this website is provided for general information only and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from financial, legal and taxation advisers. Although every effort has been made to verify the accuracy of the information, we disclaim all liability (except for any liability which by law cannot be excluded), for any error, inaccuracy, or omission from the information or any loss or damage suffered by any person directly or indirectly through relying on this information.

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