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Get a $30,000 deduction before the end of the financial year

Article By Adam Hurwood | | Accounting & Tax
The Instant Asset Write-Off first announced in the 2015/16 Budget has proven to be popular with small business and given its popularity the government has decided to both increase and extend the threshold up to 30 June 2020.

What is the current Instant Asset Write-Off (IAWO) threshold?

In a progressive ramp-up to the upcoming election, we have essentially ended up with three different thresholds in one year. To keep the supposedly ‘simplified depreciation’ rules simple, the legislated thresholds are as follows:

$20,000–          Before 29 January 2019
$25,000–          From 29 January 2019 until before 7:30pm (AEDT), 2 April 2019
$30,000–          From 7:30pm (AEDT), 2 April 2019 until 30 June 2020
$1,000–          From 1 July 2020

Any assets over the thresholds at the respective date of purchase, are not eligible for the IAWO and instead will be subject to the appropriate depreciation rules.

Excluded from the IAWO are:

  • Assets that are lease out for more than 50% of the time
  • Assets allocated to a Low Value Pool
  • Horticultural plants
  • Software allocated to a software development pool
  • Capital works (such as concrete slabs and structural improvements)

Who is eligible?

The IAWO is only accessible to Small businesses with aggregate turnover of less than $10m and will be eligible to write-off assets under all three thresholds. Medium sized business with aggregate turnover of less than $50m, will only be eligible to write-off assets from the 2nd of April under the $30,000 thresholds. Assets purchased prior to this date will need to be depreciated, under the appropriate rules.

We must emphasise that these initiatives are only applicable to ‘businesses’. The simplified depreciation rules have been and will continue to be accessible to only those classified as carrying on a business. Any entity or activity not meeting the definition of ‘carrying on a business’ will be subject to alternative depreciation rules.

If you are unsure of your eligibility of the Instant asset write-off rules or what depreciation rules apply to you, please do not hesitate to contact your Altitude Adviser.