Businesses buy now before 30 June and you can get up to $150,000 instant asset write off!
Under instant asset write-off eligible businesses can:
- immediately write off the cost of each asset that costs less than the threshold
- claim a tax deduction for the business portion of the purchase cost in the year the asset is first used or installed ready for use.
Instant asset write-off can be used for both new and second-hand assets. Some exclusions and limits apply.
The instant asset write-off eligibility criteria and threshold have changed over time. You need to check your business's eligibility and apply the correct threshold amount.
Example 1: Purchase of a motor vehicle for business purposes – the effect of the car limit for depreciation
Edward and Edna own and run a small irrigation supplies business. On 27 March 2020 the business purchases a luxury car that is designed to carry passengers, for $80,000. The instant asset write-off threshold at the time they first use the car in the business is $150,000.
The cost of the car for depreciation is limited to the car limit at that time. As the cost of the car is above the $57,581 car cost limit for depreciation, the business can only claim an instant asset write-off of $57,581 for the year ending 30 June 2020. The business can't claim the excess cost of the car under any other depreciation rules.
They also decide to update their work ute and the business purchases a ute for $65,000 on 27 April 2020. The ute isn't designed to carry passengers (and has been set up with all the trade tools in the tray) so the car cost limit for depreciation doesn't apply. The business can claim a full deduction of $65,000 as an instant asset write-off.
Example 2: Purchasing multiple assets
PlumbCo is a company that operates a plumbing business that has an aggregated turnover less than $10 million. On 10 April 2019, PlumbCo purchases a new van for $22,000 and starts to use it for the business. The following month PlumbCo purchases a trailer for $14,000 and starts to use it to support the business.
PlumbCo has spent a total of $36,000. As the $30,000 instant asset write-off threshold applies to each asset, PlumbCo is able to claim a deduction for both the van and the trailer in its 2019 tax return.