Following the Government’s announcement in March that they would be Increasing the Instant Asset Write-off Scheme from $30,000 to $150,000. In June, the Government extended the deadline to participate in the Scheme from 30 June 2020 to 31 December 2020; giving businesses an extra 6 months to purchase a new and/or used asset and claim the full depreciation in the financial year they purchase the goods (rather than claiming the depreciation over the life of the asset).
The benefit to small businesses in taking part in a Scheme like this is this is that a business can reduce their tax bill in the financial year the asset is purchased by claiming the full depreciation amount and therefore preserve their cash flow.
Without, this Incentive a small business entity would only have been able to claim depreciation at 15% of the purchase price in the financial year they purchased the asset.
- Your business simply needs to purchase a new/used asset up to the value of $150,000 and ensure the asset is installed/ready for use between 12th March 2020 and 31st December 2020
- Your business needs to have an aggregated annual turn-over less than $500 million
- Can purchase multiple assets and use the Scheme for each providing each asset is under $150,000.
- If you wish to purchase a new asset, over $150,000 you may be eligible for the Accelerated Depreciation Scheme.
A Few Examples of the Scheme in Action
1/ Purchase of a used truck
On the 30th April 2020 Simon purchased a used Iveco Stralis Prime Mover for $128,000 for use within his transport business.
As the truck is under $150,000, Simon claimed the full $128,000 purchase as an upfront deduction in his businesses year ending 30 June 2020 Tax Return.
2/ Purchase two new utes
On the 1st August 2020 Gerry purchased two new Toyota Hilux’s each for $30,000 for his plumbing business.
As the cars are both under $150,000, Gerry will claim both the $30,000 purchases ($60,000 in total) as an upfront deduction in his businesses year ending 30
June 2021 Tax Return.
3/ Purchase of a new excavator
On the 15th July 2020 Rodger purchased a new Airman Excavator for $82,000 for his excavation business.
As the excavator is under $150,000, Rodger will claim the full $82,000 purchase as an upfront deduction in his businesses year ending 30 June 2020 Tax Return.
For further details on how the scheme works download our COVID-19 Government Business Investment Initiatives for SME’s Flyer or if you’d like to have a chat about the Scheme your welcome to give me a call on 0431 177 605 or drop me a note via the Contact Us page.
I’d also recommend touching base with your Accountant to confirm your eligibility for the Scheme.
COVID-19 has had a major impact on our economy with some businesses struggling to cope. If you are concerned about the impacts of the current situation on your business and/or its impacts to your businesses current/future lending or are considering applying for a loan in the future I’d be happy to have a phone chat with you to help you get your head around things – no cost, no obligation.
Simply follow this link to my calendar to find a time that works for you. We’re all in this together and I’d be happy to help.
Alternatively you can also contact me by texting or calling 0431 177 605 or via our Contact Us page.