With the election over, we now have a clear understanding of the tax changes that came with the latest budget. The instant asset write off is one of the most important tax planning opportunities leading into 30 June 2019. The date of purchase matters for the threshold to claim the write-off, thanks to two different government changes during the 2019 financial year.
Here are the basics:
The instant asset write-off threshold has been increased to $30,000 and extended to 30 June 2020.
If you purchase an asset (new or second hand) costing less than $30,000 and it is used or installed ready for use from 7:30pm AEDT on 2 April 2019, you can claim a deduction for the business portion.
Different thresholds apply for assets purchased before that date... so you need to be very clear on when the asset was purchased.
- from 7.30pm 2 April 2019 onwards - you can claim $30000.
- from 29 January 2019 until before 7.30pm AEDT on 2 April 2019, the threshold is $25,000
- before 29 January 2019, the threshold is $20,000.
You may purchase and claim a deduction for multiple assets provided each asset is under the relevant threshold.
Assets that cost $30,000 each or more can't be immediately deducted. You can continue to deduct them over time using the small business pool.
The instant asset write-off has also been expanded to include businesses with a turnover from $10 million to less than $50 million.
Here is an example:
You buy a new car that is for
business purposes, in the business accounts for $32,000 on the 15thJune 2019. You trade a car for $18,000, with a net change over of $14,000.
Broken down if you are GST
GST REFUND : $2909 (1/11th $32,000)
GST PAYABLE : $1636 ( 1/11th of the vehicle traded in)
TAX SAVING: $8000 ($29,091($32,000 car less gst) x company tax rate)
TAX PAYABLE Possibly some tax payable on the car traded depending
on past depreciation.
Lets be much simpler.
Buy 8 new computers at $2,500
and a server for $15,000, the entire $35,000 is a deduction in 2019, reducing
your tax liability by $9,625 at company tax rates.
Be careful of sets of assets,
for example 12 chairs for a boardroom at $3,000 each would not qualify, as the
set is over the threshold.. Second
element costs such those after market add
ons the dealer wants to sell you when you purchase a car count toward the overall price of the one asset.
If you have any questions in
relation to the instant asset write-off, we encourage you to contact us to
ensure you will be eligible for the incentive by phoning our office on 07 55362288 and speaking with one of our Accountants to clarify your situation.