Budget 2019: Instant asset write-off increased to $30,000
The write-off will now be open to businesses with turnover up to $50 million.
The instant asset write-off will be increased from $25,000 to $30,000, and extended to small and medium businesses with an annual turnover of up to $50 million (up from $10 million previously), as part of the Federal Budget released by treasurer Josh Frydenberg yesterday. The change will go into effect from tonight, and remain in place until 30 June 2020.
This will open up the write-off to an additional 220,000 businesses, according to the treasurer, and take the total number of businesses eligible for the deduction up to 3.4 million.
The announcement comes after Labor's own proposal to introduce the Australian Investment Guarantee, which would let businesses claim a 20% deduction on any eligible new asset worth more than $20,000. In January, the government announced plans to increase the write-off from $20,000 to $25,000, but this has not yet been legislated.
The increase will cost an additional $400 million, in addition to the $750 million earmarked for January's proposal to raise the threshold from $20,000 to $25,000. The treasurer also confirmed that planned SME tax cuts would be fast-tracked.
What does the change mean for my business?
If your business has an annual turnover of $10 million to $50 million, you will now be able to make a deduction on every new asset under $30,000. Businesses with a turnover below $10 million will continue to be able to claim the write-off as before, with the threshold increased from $25,000 up to $30,000.
How does it work?
If your business is eligible and has purchased an eligible asset, you can make a deduction on the taxable purpose proportion of the asset. This is the proportion of the asset that will be used for earning assessable income for your business. In order to determine this amount, you must subtract any private use proportion, which is the proportion of the time that the asset will be used for personal use instead of business use.
It is only the taxable purpose portion of the asset that is deductible, and the entire cost of the asset must be less than the $30,000 threshold.
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