Instant asset write-off applies to most purchases from RDW

The Federal Government’s Economic Stimulus Package consists of two investment components: the Instant Asset Write off (on assets under $150,000) purchased by June 30 2020. The second is the Backing Business Investment (50% Instant Depreciation Write off on assets of ANY value) which applies from March 12 2020 until June 30 2021. Both components are available to all companies with less than $500m turnover.

The Instant Asset Write Off

  • Assets can be NEW or USED
  • The asset must be first used or installed ready for use from 12 March until 30 June 2020,
  • The instant asset write-off threshold will be increased from $30,000 to $150,000 for businesses with aggregated annual turnover of less than $500 million (up from the current $50 million threshold).
  • The threshold applies on a per asset basis, so eligible businesses can immediately write-off multiple assets.
  • There is NO LIMIT to the number of assets acquired under this initiative.
  • The threshold will revert to $1,000 for small businesses (turnover less than $10 million) from 1 July 2020. Be quick!
  • Applies to Eligible Assets (including Machinery, attachments, vehicles etc) that are purchased outright or financed on Chattel Mortgage or Commercial Hire Purchase (it does NOT apply for items purchased using Finance Lease). Make sure you contact your financier for advice.

50% Instant Depreciation Write Off

  • Contrary to most reports, this is available for asset purchases of ANY value as long as the turnover test is met. However, as most businesses are likely to use the Instant Asset Write off above for items below $150,000, it’s most likely to be used for items >$150,000
  • Assets must be NEW (not used). However, note last months Newsletter advice about splitting purchases, for instance buying a used machine and the attachments SEPARATELY might get your purchase below the Instant Asset Write Off thresholds. This opportunity needs to be addressed by your advisors to ensure what you are buying are considered separate units of property and therefore meet the schemes requirements.
  • The asset must be first used or installed ready for use from 12 March until 30 June 2021 (next year), This initiative is available for 15 months (until June 30, 2021).
  • Because the Instant Asset Write Off expires 30 June 2020, eligible businesses can use this 50% depreciation rule between 1 July 2020 and 30 June 2021 for ANY items (including <$150,000), on an asset by asset basis (i.e. no double dipping).
  • Businesses with a turnover of under $500 million will be able to deduct 50% of the cost of the asset upon installation, with existing depreciation rules applying to the balance of the asset.
  • There is NO LIMIT to the number of assets acquired under this initiative.
  • Applies to Eligible Assets (including Machinery, attachments, vehicles etc) that are purchased outright or financed on Chattel Mortgage or Commercial Hire Purchase (it does NOT apply for items purchased using Finance Lease). Make sure you contact your financier for advice.

 

However, these changes do not take effect until new laws are passed through Parliament, but are unlikely to be opposed. Your advisors can confirm how the stimulus measures can apply in your circumstances and we are willing to discuss with them if necessary.

 

 

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