Instant Asset Write-Off

It has changed over the last few years as shown in the table below.

The entire cost of the asset must be less than the instant asset write-off threshold, irrespective of any trade-in amount. This table assumes that you are not registered for GST.

In working out the amount you can claim, you must subtract any private use proportion. The balance (that is the proportion used in earning assessable income) is generally the taxable purpose proportion. While only the taxable purpose proportion is deductible, the entire cost of the asset must be less than the threshold.

Note that if you later sell or dispose of an asset for which you claimed an instant asset write-off, you include the taxable purpose proportion of the amount you received for the asset in your assessable income.

EXAMPLE: EXCEEDING THE THRESHOLD

Derrick owns a plumbing business called Derrick’s Plumbing which qualifies as a small business. The business purchases a ute for $40,000 on 28 July 2016. Derrick estimates the ute will be used 40% of the time for his business.

Even though the value of the ute to the business is $16,000 ($40,000 × 40%), Derrick can't immediately write it off. Instead he adds the $16,000 for the ute to Derrick’s Plumbing small business pool.

EXAMPLE: IMMEDIATE WRITE-OFF

On 18 May 2016 Florence buys a new powerful computer for $6,800 that she uses 80% of the time for business purposes and 20% of the time for personal purposes. She also bought a new printer for $700 which she uses for 100% of the time for business purposes.

For the computer, Florence calculates her instant asset write-off as 80% (the business use proportion) of $6,800, so she claims $5,440. For the printer, she claims the entire cost of $700.

Florence includes the combined amount of $6,140 at Label A of the Business and professional items schedule which is filled out when completing her tax return.