A new scheme introduced in Federal Government’s 2020/2021 Budget aims to lift the claim limit on depreciating assets for business owners, and incentivise expenditure in small businesses, while an increase in threshold for Instant Asset Write-Offs offers more businesses opportunity to claim deductions in this tax year. Read on to find out more about how these changes may impact your business and where to go for more information.
Instant Asset Write-Off
As part of Federal Government’s Economy Stimulus Package, the threshold for Instant Asset Write-Offs was increased from $30,000 to $150,000 for assets used or installed ready for use between March 12, 2020 and June 30, 2021, and purchased by December 31, 2020.
All businesses with an aggregated turnover under $500 million (up from $50 million) can claim an immediate deduction for the business portion of the cost of an asset in the year the asset is first used or installed ready for use.
Instant Asset Write-Off can be used for multiple assets, as well as new and second-hand assets, provided the cost of each individual asset is less than the relevant threshold.
Temporary Full Expensing Scheme
More recently, Government announced further tax claim measures under the Temporary Full Expensing Scheme, which allow businesses with a turnover of up to $5 billion to claim part or all of the cost of work-related assets purchased and installed for use before June 30, 2022.
The Temporary Full Expensing scheme operates much like the Instant Write-Off, which allows businesses to claim the depreciation amount of a work-related purchase immediately instead of over several years.
Most importantly, under the new scheme the purchase limit has been removed so businesses could claim an unlimited number of new eligible assets of any dollar value, while businesses operating with an aggregated turnover of less than $50 million, could claim the full cost of all eligible second-hand assets.
Get expert tax advice ahead of financial year end
With tax claim changes that could positively impact your business, it’s vital you seek sound tax advice to ensure you don’t miss out.
For more information about eligibility, thresholds, exclusions and limits for Instant Asset Write-Offs or Temporary Full Expensing, visit the ATO website.
For any other financial advice pertaining to lending or mortgages, get in touch with a Mortgage Express broker.
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