Instant Asset Write Off
On 29 January 2019 the Government announced that it would be increasing and extending the Instant Asset Write Off .
The current threshold of $20,000 will be increased to $25,000 from 29 January 2019. The concession will also be extended from 30 June 2019 until 30 June 2020. This incentive is available for all small businesses (annual turnover up to $10m)
In the 2019 budget (effective from 2 April 2019) the Government extended the write off to assets costing less than $30,000. Further, it extended the provisions to medium size businesses with a turnover between $10- $50m per annum.
The cost of an asset includes both the amount you paid for it and any additional amounts you spent on transporting and installing it ready for use. The cost also includes amounts you spent on improving the asset.
If you are registered for the goods and services tax (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 $25,000 exclusive of any GST). This is because you will claim as a credit the GST paid in your activity statement for the relevant period. Our examples assume your business is registered for GST and unless otherwise stated, the GST has already been excluded.
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 $25,000 inclusive of any GST).
When you trade a car or any other asset, typically the agreed price of your trade-in is deducted from the cost of your new asset. The sale and purchase of the asset generally appear as one transaction.
However, for the purpose of the simplified depreciation rules, the transactions are considered separate. If the purchase price of your asset (irrespective of the amount you were paid for your trade-in) is $25,000 or more, then it needs to be added to the small business pool and can’t be immediately written-off.