$150k Instant Asset Write-off Extended

As part of the Government’s measures to support businesses survive the economic impact of COVID-19, the instant asset write-off (IAWO) threshold amount was increased from $30,000 to $150,000 as of 12^th March, 2020.

Initially intended to end on 30^th June 2020 and revert back to different, less beneficial depreciation rules from the 1^st July 2020; the Federal Government has decided to extend the period up to and including the 31^st December, 2020. This proposed extension is currently being processed by the Government, and is yet to be finalised at the time of posting this blog (see here for more information).

This IAWO increase is available to all businesses with an annual turnover of less than $500 million and will help to further support planned investments for around 3.5 million businesses in Australia.

Here are the facts:

• Eligible businesses will be able to claim immediate deductions on their annual turnover for assets purchased for $150,000 or less (excluding GST where applicable)
• There is a cap for some “Motor Vehicle” purchases – which are limited to a maximum of $57,581 for the 19/20 Tax Year ($59,136 for the 20/21 Tax Year)
• This deduction will be claimable on a PER asset basis (i.e. you can write off multiple assets at $150,000 each) (grouping rules do apply in some instances)
• To be eligible your business must have an annual turnover of less than $500 Million
• This IAWO increase is in effect from 12^th March 2020 until December 31^st, 2020 for assets first used and installed by the end date
• This will result in a lower payable tax amount at the end of the financial year

We will endeavour to keep you updated on when this extension is confirmed by the Government. In the meantime, if you have any questions or queries relating to the IAWO increase please contact our Accounting team here.

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