The government’s scheme passed in 2015/16 that allowed instant asset write off for small business owners was a smash hit among businessmen and women across the country. The program originally allowed asset write-offs up to a threshold of $20,000 for businesses that turn over less than $50 million annually. These numbers have shifted impressively for the last few years and with the COVID-19 pandemic causing economic struggles all over the globe, the government has answered the call of concerned small and medium business owners and increased the thresholds by some margin.
Small and medium business owners are now classified as those turning over less than $500 million a year, up from $50 million and that’s not all, the threshold for the instant asset write off has been increased from $20,000 to a whopping $150,000. It is hoped that these changes can help to prop up small and medium businesses in this extremely trying time. All while decreasing taxes paid by a projected $2.5 billion over 2 years.
Now, you may be wondering if your business is eligible for the program and will be able to benefit from its tax deductions. This is a fairly complex system and largely depends on the type of assets you wish to write off and when those assets wore purchased. As with all things related to tax and finances I highly suggest meeting with a financial adviser. To first see if you are eligible and calculate the worth of the assets to your business.
The kind of assets that you can claim instant write off with may be both first and second hand and it must be logged when you first started using the assets and how much the asset was worth at the time of purchase.
The list of approved assets is not always set in stone and the claimable amount may vary depending on the time of purchase and other factors such as the number of passengers in the case of a vehicle:
- Work use vehicles (in accordance with the special factors mentioned above).
- Office furniture.
- Computer equipment.
- In–house computer software (developed solely for use in your business. This does not include shelf boards or subscription-based software).
- Intellectual property such as patents, designs or copyrights.
- Mining, quarrying or prospecting rights or information.
The following assets will be excluded from the program and you may not be able to claim for them.
- Work-related items given to staff members.
- Capital works such as new buildings or work done to existing buildings.
- Improvements to land.
- Computer intangibles such as shelf bought software systems.
- Inventory or consumable goods.
As stated above the use of a financial adviser for this process is highly recommended. Even if you are not eligible for an instant asset to write off now the financial landscape of the country is changing every day so it may still be worth checking with an adviser.