Immediate Write Off For Individual Small Business Assets Costing Less Than $20,000
the current 2017/18 financial year businesses may want to consider bringing forward asset purchases to before June 30 to take advantage of
Businesses with a turnover less than $10m can claim an immediate deduction for assets costing less than $20,000 up until 30 June 2018.
(Stop Press:- as part of the 2018/19 Federal Budget it is proposed to extend availability of this deduction to 30 June 2019). Note that
the business turnover threshold for this concession increased from $2 million to $10m on July 1, 2016.
Here are some key points to consider:
- To be eligible, the asset must be purchased by a business turning over less than $10m
- The asset can be new or second hand
- The amount must be under $20,000 exclusive of GST (i.e. $22,000 including GST)
- If you borrow to purchase the asset, the asset is still eligible
The asset has to be installed and ready to use by the deadline (purchasing a car to be delivered in the future won’t qualify until the car
To claim the write off on a motor vehicle you will need to have a valid log book and claim only that percentage of the cost as an
immediate write off
Some taxpayers may try to reduce the cost of an asset to under $20k by using a trade-in when purchasing the asset (for example a car).
However, the monetary value of the trade-in will form part of the asset cost and not reduce the cost of the asset.
Any attempt to manipulate invoices etc. will attract the ATO's use of the anti-avoidance rules, thereby eliminating the $20,000 write off.
If your business has a small profit or even a loss, the write off will be of little or no benefit in the current year (losses are not
refundable but can be
carried forward to the next year)
Building structural improvements are not eligible for the instant write off
Depreciating assets valued at more than $20,000 will be depreciated in one pool at a rate of 15% in the first year and 30% in future years
If your pool balance at the end of the year is less than $20,000 before applying any other depreciation deduction, the entire pool balance
can be written off
If your business is not a ‘Small Business Entity’ you will need to depreciate all assets purchased over $300. Any assets purchased for $300
or less can be written off immediately
Other 2018 Year End Tax Planning Opportunities
Disclaimer: This newsletter contains general information only. Regrettably, no responsibility can be accepted
for errors, omissions or possible misleading statements or for any action taken as a result of any material in this guide. It is not
designed to be a substitute for professional advice, as such a brief guide cannot hope to cover all circumstances and conditions applying to
the law as it relates to these items.