Instant Asset Write-off For Businesses

The instant asset write-off (IAWO) for depreciating assets has been expanded. Since then, the IAWO has been extended by 6 months to 31st December 2020.

The cost caps for small and medium businesses (total annual turnover under $50m) are:

Date asset first used or installed ready for use by a small or medium business Cap (asset must cost less than)
1st July 2019 – 11th March 2020 $30,000
12th March 2020 – 31st December 2020 $150,000

 

You should note that:

  • the increased caps apply to assets acquired by small business entities (total annual turnover less than $10m) at or after 7.30 pm (AEST) on 12th May 2015;
  • a medium business (total annual turnover $10m or more and under $50m) can access the instant asset write-off for depreciating assets first acquired in the period beginning at or after 7.30 pm (AEST) on 2nd April 2019 and ending on 31st December 2020. The threshold depends on when the asset was first used or installed ready for use. If the asset was first used or installed ready for use:
      • before 12th March 2020 — the threshold is $30,000;
      • on or after 12th March 2020 to 31st December 2020 — the threshold is $150,000;
  • the threshold for a “low value” pool for a small business entity (total annual turnover under $10m) is $150,000 for 2019-20 (and also 2020-21 if the entity’s income year ends on or before 31st December 2020) – the total value of the pool is deductible at the end of the income year if it is below the threshold; and;
  • the lock-out rule – which locks a small business entity out of the simplified depreciation rules for 5 years if the business stops using those rules – will begin to apply again from the first income year that ends after 31st December 2020 (i.e. 2021-22 for businesses that balance at 30th June).

The cost caps for larger businesses (total annual turnover $50m or more and under $500m) are:

Date asset first used or installed ready for use by a large business Cap (asset must cost less than)
12th March 2020 – 31st December 2020 $150,000

You should note that:

  • the increased cap applies to assets acquired in the period beginning at or after 7.30 pm (AEST) on 2nd April 2019 and ending on 31st December 2020; and
  • a large business that has adopted a substituted accounting period can access the $150,000 instant asset write-off for depreciating assets first acquired in the period beginning on 2nd April 2019 and ending on 31st December 2020.

To learn more about instant asset write-offs for your business, get in touch with avance today!

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