Small Business Instant Asset Write-off Extended to June 2019

If you buy an asset to use for business purposes and it costs less than $20,000, you can immediately deduct the business portion of the cost in your tax return. This deduction is used for each asset that costs less than $20,000. You would then claim the deduction through your tax return, in the year the asset was first used or installed ready for use.

It is important to note that the cost of an asset includes both the amount you paid for it and any additional amounts you spent on transporting and installing it.

Note!

• There is no limit to how many assets you can claim the deduction for. However, each one must cost less than $20,000.
• If you later sell the 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.

What Assets Are Included?

• Assets that cost less than $20,000
• Assets that are used for business purposes
• ‘Physical’ assets – e.g. computers, phones, vehicles, tools etc
• New or second-hand assets

Tip! You may be able to claim a deduction for business website costs using the simplified depreciation rules. Speak to us to find out more.

What Assets Are Excluded?

• Assets that cost more than $20,000
• Assets that are used for personal purposes
• Assets that are leased out (or expected to be leased out) for more than 50% of the time on a depreciating asset lease
• Assets you already allocated to a low-value pool
• Horticultural plants – e.g. grapevines
• Software allocated to a software development pool
• Capital works

Tip! Capital works used to produce income, including buildings and structural improvements, are written off over a longer period than other depreciating assets. Speak to us to find out more.

How This Works

You buy a new computer for $6,800 that you use 80% of the time for business purposes and 20% of the time for personal purposes.

You also buy a second-hand printer for $700 which you use 100% of the time for business purposes.

For the computer, you would calculate your instant asset write-off as 80% (the business use proportion) of $6,800, so you would claim $5,440.

For the printer, you would claim the entire cost of $700.

Are You Registered For GST?

The threshold amount of $20,000 assumes that you are not registered for GST.

If you are registered for GST, you exclude the GST amount you paid on the asset when you calculate your depreciation amounts (and your instant asset write-off threshold is $20,000 exclusive of any GST).

If you are not registered for GST, you include the GST amount you paid on the asset in your depreciation calculations (and your instant asset write-off threshold is $20,000 inclusive of any GST).

Tip! For further information about GST impacts, speak to us.

See Also: Instant Asset Write Off Example