Previously the immediate write off was limited to assets which cost less than $1,000. However for the 2016 Financial Year it was increased to $20,000 for businesses with a turnover of less than $2 million. This was set to go back to $1,000 on 1st July 2017, however in the Budget handed down on the 9th May 2017 this has been extended to 30 June 2018 for businesses with an aggregated turnover of less than $10 million.
In order to access this immediate deduction there are a few key points to remember:
- The Asset(s) needs to be purchased and used (or installed ready for use) before 30 June 2018.
- This concession is not a one-off. The immediate deduction can be applied to multiple assets purchased as long as they are individually under the $20,000 threshold.
- If your business is registered for GST, then the cost of the asset needs to be less than $20,000 exclusive of GST (alternatively, $22,000 including GST).
- The immediate write off can be used for both new and second hand goods.
- Where the asset is not solely used for business, only the business portion will be claimed as a deduction. For example if a motor vehicle is purchased for $19,000 and only 70% is for business usage than only $13,300 is immediately deductible.
- You do not receive the $20,000 back as a tax refund however it does reduce the amount of tax your business has to pay. For Example, if your business is in a company structure the most you will ‘get back’ is 27.5% in the 2017 Financial Year which equates to a tax saving of $5,500.
- If the asset cost more than $20,000 it will be allocated into a pool and depreciated at a rate of 15% in the first year and 30% for subsequent years. If the closing balance of the pool is less than $20,000 it can also be written off.
If you have any questions as to whether you qualify for this immediate deduction or would like any further information please contact us.