As many of you may be aware, an increase in the instant asset write-off threshold was announced as part of the 2019 Federal Budget. There was also an extension in the period that businesses could access the write-off. On 6 April, the Bill 2019 achieved Royal Assent, which means the legislation was passed by Parliament. 

What has changed?

Basically, the instant asset write-off threshold increased from $25,000 to $30,000 from Budget night (2 April 2019) to 30 June 2020.

This means that there will be different thresholds that will apply across different relevant dates or periods. And, to make things a little more complicated, there are three different thresholds that could apply during the 2019 financial year. 

If you are an eligible business, you can now write off multiple assets that cost less than $30,000. Those assets need to be first used, or installed ready for use, from 2 April 2019 to 30 June 2020.

More good news is that Small and Medium businesses can now access the instant asset write-off. Small businesses are those with an annual turnover of less than $10 million. Medium businesses have an annual turnover of between $10-$50 million.

The ATO table below is a handy reference:

Date Range  Threshold for each asset
 02/04/2019 to 30/06/2020            $30,000
29/01/2019 to 02/04/2019 $25,000
12/05/2015 to 28/01/2019 $20,000
01/01/2014 to 12/05/2015 $1,000
01/07/2012 to 31/12/2013 $6,500
01/07/2011 to 30/06/2012 $1,000

 

Important to note

It is important to note that the entire cost of the asset purchased must be less than the instant asset write-off threshold. This is irrespective of any trade-in amount. And, if you use the asset for private use at all, this proportion must be subtracted from the instant write-off amount you are able to claim. While only the taxable purpose proportion is deductible, the ATO says the entire cost of the asset must be less than the threshold.

Also, if you later sell or dispose of an asset that you have claimed as an instant asset write-off, you will need to include the taxable purpose proportion of the amount received for the asset in your assessable income.

For further information about the changes to the instant asset write-off talk to your Johnsons MME adviser or email contactus@jmme.com.au.