Businesses are able to write off the costs of buying and repairing depreciable assets (including new or used equipment) of ANY value up until June 30, 2022.
As part of the 20/21 Federal Government Budget update, the Instant Asset Write off was expanded to allow businesses with a turnover up to $5 billion (up from $500 million, but excluding mining businesses) to immediately deduct the full cost of eligible assets supplied and used or installed before 30/6/2022. The cost of improvements (including repairs) to existing eligible depreciable assets is also covered. The previous limit on the value of the item of $150,000 has been increased to any value.
The Federal Government’s Economic Stimulus Package consists of two investment components: the Instant Asset Write off (on assets under $150,000) purchased by the 31st of December 2020. The second is the Backing Business Investment (50% Instant Depreciation Write off on assets of ANY value) which applies from March 12th 2020 until June 30 2021. Both components are available to all companies with less than $500m turnover.
- Assets can be NEW or USED
- The asset must be first used or installed ready for use from 12 March until 31st of December 2020,
- The instant asset write-off threshold will be increased from $30,000 to $150,000 for businesses with aggregated annual turnover of less than $500 million (up from the current $50 million threshold).
- The threshold applies on a per asset basis, so eligible businesses can immediately write-off multiple assets.
- There is NO LIMIT to the number of assets acquired under this initiative.
- The threshold will revert to $1,000 for small businesses (turnover less than $10 million) from 31st of December.
- Applies to Eligible Assets (including Machinery, attachments, vehicles etc) that are purchased outright or financed on Chattel Mortgage or Commercial Hire Purchase (it does NOT apply for items purchased using Finance Lease). Make sure you contact your financier for advice.
50% Instant Depreciation Write Off
- Contrary to most reports, this is available for asset purchases of ANY value as long as the turnover test is met. However, as most businesses are likely to use the Instant Asset Write off above for items below $150,000, it’s most likely to be used for items >$150,000
- Assets must be NEW (not used). However, note last months Newsletter advice about splitting purchases, for instance buying a used machine and the attachments SEPARATELY might get your purchase below the Instant Asset Write Off thresholds. This opportunity needs to be addressed by your advisors to ensure what you are buying are considered separate units of property and therefore meet the schemes requirements.
- The asset must be first used or installed ready for use from 12 March until 30 June 2021 (next year), This initiative is available for 15 months (until June 30, 2021).
- Because the Instant Asset Write Off expires 31st of December 2020, eligible businesses can use this 50% depreciation rule between 1st of January 2021 and 30 June 2021 for ANY items (including <$150,000), on an asset by asset basis (i.e. no double dipping).
- Businesses with a turnover of under $500 million will be able to deduct 50% of the cost of the asset upon installation, with existing depreciation rules applying to the balance of the asset.
- There is NO LIMIT to the number of assets acquired under this initiative.
- Applies to Eligible Assets (including Machinery, attachments, vehicles etc) that are purchased outright or financed on Chattel Mortgage or Commercial Hire Purchase (it does NOT apply for items purchased using Finance Lease). Make sure you contact your financier for advice.
Please check with your own financial advisors to confirm how the stimulus measures can apply in your circumstances
