Extended Instant Asset Write Off – Making the most of the $150k Threshold Increase

The Instant Asset Write-Off threshold has been extended for six months to 31 December 2020. The increased threshold is designed to further assist business by bringing forward tax deductions for eligible expenditure, thereby aiming to improve the overall cashflow position of the business.

To recap, an immediate deduction can be claimed for acquired eligible assets with a purchase price of up to $150k (exc GST). This threshold applies from 12 March 2020 until 31 December 2020.

ARE YOU ELIBGIBLE?

To be eligible:

• You’re aggregated turnover must be less than $500 million
• The asset was purchased after 12 March 2020 and before 31 December 2020
• Assets must be used or installed ready for use between this timeframe

WHAT ASSETS ARE ELIGIBLE FOR THE HIGHER IAWO THRESHOLD?

Providing you meet the above criteria:

• All new and used assets that cost less than $150.000 per item
• Purchase multiple assets which total more than $150,000, with each item not exceeding the $150,000 threshold

 WHICH ASSETS ARE INELIGIBLE FOR THE HIGHER IAWO THRESHOLD?

The below assets must follow the general depreciation rules:

• Leased out assets, or those expected to be leased out, for more than 50% of the time on a depreciating asset lease
• Assets allocated to a low value assets pool before using the simplified depreciation rules
• Capital works deductions

PRACTICAL EXAMPLE OF HOW THE INCREASED IAWO CAN ASSIST YOUR BUSINESS:

What to do next

Start by reviewing your capital replacement plan and your updated COVID-19 operational budget. Don’t have one, that’s ok it’s time to get in contact. Buying an asset, especially in volatile times can be risky business. This is really where the right advice matters.

Get in contact with us – we would love to help.