If you are thinking about purchasing assets (such as vehicles, equipment, machinery, tools of trade, office equipment, or anything else) for your business before end of financial year, you may be eligible to take advantage of the government’s Instant Asset Write-Off (IAWO).
The Instant Asset Write Off has been increased to $150,000 per asset, which could result in significant tax savings just for purchasing assets before 31 December 2020.
According to business.gov.au:
The instant asset write-off threshold has been increased from $30,000 to $150,000 and expanded access to include businesses with aggregated annual turnover of less than $500 million (up from $50 million). This applies from 12 March 2020 until 31 December 2020, for new or second‑hand assets first used or installed ready for use in this timeframe. The higher Instant Asset Write-Off (IAWO) threshold provides cash flow benefits for businesses that will be able to immediately deduct purchases of eligible assets each costing less than $150,000. The threshold applies on a per asset basis, so eligible businesses can immediately write‑off multiple assets.
In simple terms, this means businesses with an aggregated annual turnover of less than $500 million can instantly write-off any asset less than $150,000 which is purchased and ready for use between 12 March 2020 and 31 December 2020. In addition, because this tax break is applied to each individual asset, businesses can instantly write-off multiple assets worth up to $150,000 each, during this period.
But you need to be quick because from 1 January 2021, the instant asset write-off will only be available for small businesses with a turnover of less than $10 million and the threshold will be reduced from $150,000 back down to $1,000.
If you are thinking about purchasing or upgrading any of your existing business assets, it is time to do this now. Here are some steps to follow to make sure you get the most out of this government tax break:
Get in touch with your accountant and check to make sure your business is eligible and qualifies for the Instant Asset Write-Off (IAWO).
At DD’s Taxation & Accounting, we can help you to work out if your business is eligible, and what steps you need to take to claim this on your tax return.
Once you are sure that your business qualifies, purchase your new asset(s), making sure you obtain all of the relevant paperwork and supporting documentation.
Remember that the new assets must be purchased and delivered between 12 March 2020 and 31 December 2020 in order to claim the full amount this financial year.
- That’s it! Happy days…
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