Guide to the $30,000 small business instant tax write-off
Learn how to use the $30,000 tax break to get the most out of it for your small business.
Keeping cash flow positive is important to every business and making large, essential purchases can make that tricky. But the instant asset tax write-off offers a way for you to claim assets you purchase for your business up to a value of $30,000 this financial year rather than waiting until the following year.
The instant asset write-off has now been raised to $30,000 as of 2 April 2019. From January 2019, the asset tax write-off was $25,000, and in previous years from 2015, it was $20,000. This write-off is a great way for small businesses to make essential purchases without needing to wait to claim. This guide will take you through everything you need to know about the $30,000 small business tax break.
Since 2 April 2019, businesses with a turnover of between $10 million and $50 million can also use the instant asset tax write-off (previously restricted to businesses with a turnover of less than $10 million). This is good news for businesses with higher turnovers that require larger equipment purchases.
What is the $30,000 instant tax write-off?
Small businesses that meet the eligibility criteria can purchase eligible assets up to a value of $30,000 and claim them this financial year. You just need to make the purchase and use the asset for your business in the same year that you claim the deduction before 30 June.
Any single asset purchased under $30,000 qualifies for the asset tax write-off. This means that if a business purchases multiple assets under $30,000, they should all qualify – even if the cumulative cost exceeds $30,000. The cost of the asset includes both the amount you paid for it and any additional amount spent on transporting the asset, improving it or installing it for use.
Is my business eligible to use the instant asset tax write-off?
Your business needs to meet the following criteria to use the $30,000 instant tax write-off:
- You had a turnover of less than $50 million in the last year.
What assets can I write off?
The following assets are eligible for small businesses to write off:
- The entire cost of the asset must be less than $30,000, not just the business-use portion and inclusive of GST.
- The asset can be new or used.
- The asset you purchased was first used or installed and ready to use in the income year you're claiming it in.
Please note that assets bought outside of the threshold for the $30,000 tax break will not qualify for the full amount. Asset cost thresholds have changed over the last few years, and only assets bought after 7.30pm on 2 April 2019 qualify for the $30,000 tax write-off.
What are the dates for asset cost thresholds?
|Date range||Asset cost threshold|
|7:30pm 2 April 2019 - 30 June 2020||$30,000|
|29 January 2019 - before 7.30pm 2 April 2019||$25,000|
|7.30pm 12 May 2015 - 28 January 2019||$20,000|
|1 January 2014 - 7.30pm 12 May 2015||$1,000|
|1 July 2012 - 31 December 2013||$6,500|
|1 July 2011 - 30 June 2012||$1,000|
Purchases over $30,000
If your business purchase exceeds the asset cost threshold, there are a number of things you should know:
- You can pool the business portion of most higher cost assets and claim a 15% deduction in the year you start to use the asset or a 30% deduction after the first year.
- You can deduct the balance of the small business pool at the end of the income year if the balance is below the instant asset write-off threshold.
What about trading in an asset?
If you're trading in an asset and the process appears as two transactions – e.g. you purchase a new car for business purposes and sell your existing vehicle, then the cost of the new vehicle will need to be below the $30,000 threshold in order to qualify for the instant tax write-off. This is irrespective of the money made from selling the original asset. So if your new vehicle is $35,000 but you made $7,000 selling your old car, even though you were actually only $28,000 out of pocket (below the threshold), you would still have to add the new purchase to your small business pool.
To find out more information regarding this, you can refer to the ATO website.
Questions we've been asked about the $30,000 instant asset tax write-off
Can you buy a car with the $30,000 instant tax write-off?
Yes, you can purchase a business vehicle and claim it this financial year as long as it is less than $30,000.
What do I do with assets that cost more than $30,000?
You cannot immediately claim these assets, and you will need to add these to your small business pool.
Can I claim depreciation on assets that I instantly write off?
No, you cannot claim depreciation in later years on assets that you immediately write off.
Can I instantly claim multiple assets?
Yes. You can claim multiple assets as long as they meet the criteria.
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