COVID-19: Instant asset write-off increased to $150K

Posted 22 May '20

If you’re a small business owner we’re sure you’ve heard of the instant asset write-off increase that the Government announced as part of their first stimulus response package to COVID-19.

If you haven’t…

You may know that before COVID-19 the government had introduced an instant asset write-off incentive where business who turn over less than $50 million, can immediately write off the cost of each asset they purchase up to the value of $30,000.

The benefit of this incentive is that the business would receive a tax deduction for the entire value of each asset purchased up to $30,0000.

From the 12 March 2020 to the 30 June 2020 the write-off threshold has been upped to $150,000 and the eligibility criteria extended to businesses with a turnover up to $500 million.

How does this apply to your business?

For larger scale businesses looking to upgrade machinery, fleet or equipment this can be a great time to maximise on your tax deductions before the end of the financial year.

For the smaller business, it might not have as much impact. Being able to claim a tax deduction for an asset worth up to $150K, means you really need to either have that money to spend in the first place OR receive a benefit to your taxable position.

If you don’t have tax to pay before deductions, it’s fair to consider if the unplanned spending would really improve your personal business situation.

What can qualify as an asset deduction?

– IT Hardware – computers, printers, laptops tablets or phones etc.
– Motor Vehicles (up to the depreciation limit of $ 57,581)
– Commercial Vehicles (i.e. a truck up to $150K)
– Tools and Equipment
– Shopfront Assets – Signage, display screens, air conditioners, furniture or fittings
– Worksheds

Should you take advantage of this incentive?

It all depends on your personal business situation. Our recommendation for using this incentive should be based purely on whether your business needs the new asset.

We love a tax incentive as much as the next guy, but our advice is really based on only investing in equipment that your business needs that will add value to your operations.

This is where tax planning with your trusted advisor is so beneficial. Talk to the person that understands your numbers and can assist in providing advice that can help you make informed purchasing decisions.
Have you booked your tax planning? Call your Empire Advisor today to learn more 07 3124 0244.