Posted by Rodney Michail ● 1 May, 2019

[FAQ] Am I eligible for an immediate write-off?

There is no better time to buy assets for your business than now.

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Simplified depreciation is another win for small businesses as it allows immediate write-off for a depreciating asset as long as it does not exceed the instant asset write-off threshold.

Depreciating Asset

A depreciating asset is anything owned by the business, except excluded assetsthat declines in value over time and has a limited useful life. A vehicle used for business is a perfect example of a depreciating asset.

Simplified depreciation can be applied by small business owners with an aggregated turnover of less than

> $10 million from July 1, 2016 onwards

> $2 million for previous income years

The table below shows how much can be claimed depending on when the asset was purchased and first used or installed ready-for-use.

From 7.30pm (AEST) on 12 May 2015 until 28 January 2019

From 29 January 2019 until before 7.30pm (AEDT) 2 April 2019

From 7.30pm (AEDT) on 2 April 2019 until 30 June 2019

 You can immediately deduct the business portion of most depreciating assets costing less than $20,000 each

 You can immediately deduct the business portion of most depreciating assets costing less than $25,000 each

 You can immediately deduct the business portion of most depreciating assets costing less than $30,000 each


The cost of the asset must not exceed the instant asset write-off threshold shown in the table below

Date Range

Threshold for each asset

7:30pm (AEDT) 02/04/2019 to 30/06/2019

$30,000

29/01/2019 to before 7.30pm (AEDT) 02/04/2019

$25,000

7.30pm (AEST) 12/05/2015 to 28/01/2019

$20,000

01/01/2014 to prior to 7.30pm (AEST) 12/05/2015

$1,000

01/07/2012 to 31/12/2013

$6,500

01/07/2011 to 30/06/2012

$1,000

 

Businesses with a turnover from $10 million to less than $50 million may also be eligible for the instant asset write-off. This applies to assets costing less than $30,000 each purchased and used or installed ready for use from 7.30pm (AEDT) 2 April 2019 to 30 June 2019.

Cost

The cost of an asset is the amount paid for it plus any other amount paid to make it ready for use.

For example:

               > Equipment: $10,000

               > Transportation: $500

               > Installation: $1,500

In this case, the cost of the asset is $12,000

What if the asset costs more than the instant asset write-off threshold?

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Small businesses can pool the business portion of higher cost assets and claim:

  • a 15% deduction in the year you start to use them or have them installed ready for use.
  • a 30% deduction each year after the first year.

 

For example: Billy, a plumber, bought a truck for $35,000 on April 3, 2019 and estimates that the truck will be used 70% of the time for business. Billy can add $24,500 ($35,000 X 70%) in his small business pool and claim $3,675 ($24,500 X 15%) new asset deduction.

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Businesses that do not qualify for simplified depreciation will follow the general depreciation rules.

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