The Government has extended the deadline to participate in the Instant Asset Write-off Scheme from 30 June 2020 to 30 June 2023; giving businesses extra time 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 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 and ensure the asset is installed/ready for use between 6th October 2020 and 30th June 2023
- Your business needs to have an aggregated annual turn-over less than $50 million to be applicable for both new/used asset purchases
- Can purchase multiple assets and use the Scheme for each asset
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.
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 $50,000 for his plumbing business.
Gerry will claim both the $50,000 purchases ($100,000 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.
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 Instant Asset Write-off Scheme Flyer or if you’d like to have a chat about the Scheme 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 suitability/eligibility for the Scheme.