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Budget 2019-2020 - Instant Asset Write-Off

Budget 2019-2020 - Instant Asset Write-Off

  • Saturday, 06 April 2019 04:44

INSTANT ASSET WRITE-OFF INCREASED TO $30K AND EXPANDED TO BUSINESSES UNDER $50M. DATE OF EFFECT - 7:30PM (AEDT) ON 2 APRIL 2019 TO 30 JUNE 2020.

The threshold for the popular $20,000 instant asset write-off will increase to $30,000* from Budget night until 30 June 2020 when it will potentially return to its original $1,000 level on 1 July 2020.

We say ‘potentially’ because the threshold has been at or above $20,000 since 12 May 2015.

The Government had previously announced an increase to the threshold for the instant asset write-off to $25,000 from 29 January 2019 but this measure was not legislated prior to the release of the Budget. The Government however intends to honor the announced rate increase.

In addition, the number of businesses that can access the instant asset write-off will increase. Currently, to qualify for the write-off, only businesses with an aggregated turnover under $10 million qualify. From Budget night, businesses with an aggregated turnover under $50 million will also be able to access the write-off.

Instant asset write-off thresholds

Small Business*

Medium business**

1 July 2018 – 28 January 2019

$20,000

-

29 January 2019 – 2 April 2019

$25,000

-

2 April 2019 - 30 June 2020

$30,000

$30,000

2 April 2019 - 30 June 2020

$30,000

$30,000

* aggregated turnover under $10 million

** aggregated turnover under $50 million

Assets will need to be used or installed ready for use from Budget night until by 30 June 2020 to qualify for the higher threshold. Anything previously purchased does not qualify for the higher rate but may qualify for the $20,000 or $25,000 threshold. Similarly, anything purchased but not installed ready for use by 30 June 2020 will not qualify.

The instant asset write-off only applies to certain depreciable assets. There are some assets, like horticultural plants, capital works (building construction costs etc.), assets leased to another party on a depreciating asset lease, etc., that don’t qualify.

FOR ASSETS COSTING $30,000 OR MORE

For small businesses (aggregated turnover under $10m), assets costing $30,000 or more can be allocated to a pool and depreciated at a rate of 15% in the first year and 30% for each year thereafter. If the closing balance of the pool, adjusted for current year depreciation deductions (i.e., these are added back), is less than $30,000 at the end of the income year, then the remaining pool balance can be written off as well.

The ‘lock out’ laws for the simplified depreciation rules (these prevent small businesses from re-entering the simplified depreciation regime for five years if they opt-out) will continue to be suspended until 30 June 2020.

Pooling is not available for medium sized businesses which means that the normal depreciation rules based on the effective life of the asset will apply to assets that don’t qualify for an immediate deduction.

This initiative is subject to the passage of legislation so don’t go out on a spending spree just yet.

* $30,000 exclusive of GST for GST registered businesses. $30,000 inclusive of GST for businesses not registered for GST.

 

 

 

 

 

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