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Claiming instant asset write-off in tax time 2020

If you’ve purchased or are planning to purchase assets for your business, you may be eligible to claim an immediate deduction under the instant asset write-off expansion.

From 12 March to 30 June 2020 (inclusive), the instant asset write-off threshold for each asset increased to $150,000 (from $30,000).

To get it right, remember:

• check if you’re an eligible business
• both new and second-hand assets can be claimed, provided each asset costs less than $150,000
• assets must be first used or installed ready for use between 12 March and 30 June 2020
• a car limit applies to passenger vehicles. The limit is $57,581 for the 2019–20 income tax year
• if your asset is for business and private use, you can only claim the business portion
• you can claim a deduction for the balance of your small business pool if it’s less than $150,000 at 30 June 2020 (before applying depreciation deductions)
• different eligibility criteria and thresholds apply to assets first used, or installed ready for use, prior to 12 March 2020.

For eligible businesses with an aggregated turnover from $10 million to less than $500 million, the $150,000 threshold applies for assets purchased from 7.30pm (AEDT) on 2 April 2019 but not first used or installed ready for use until 12 March 2020 to 30 June 2020.

Exclusions and limits

There are a small number of assets that are excluded.

In addition, if you purchase a car (a passenger vehicle, except a motor cycle or similar vehicle, designed to carry a load less than one tonne and fewer than nine passengers) for your business, the instant asset write-off is limited to the business portion of the car limit of $57,581 for the 2019–20 income tax year. For example, if you use your vehicle for 75% business use, the total you can claim under the instant asset write-off is 75% of $57,581, which equals $43,186.

You cannot claim the excess cost of the car under any other depreciation rules.

If you require any further guidance please contact us on 9592 3110

Please Note: On 9 June 2020, the government announced it will extend the $150,000 instant asset write-off until 31 December 2020. This proposed change is subject to the parliamentary process and is not yet law.