Instant asset tax write-off 2021
You may be eligible to claim an immediate tax write-off
The government has introduced a temporary full expensing incentive in addition to the extended instant asset write-off scheme. Here’s what you need to know about it, and how it can help your business get the equipment it needs.
Instant asset write-off
The government’s instant asset write-off allows eligible business owners to claim an immediate tax deduction for eligible asset purchases.
Depending on the size of your business, instant asset write-off could be claimed on assets that are new or second-hand, individual or multiple, so long as the cost of each individual purchase is less than the relevant threshold (subject to some exclusions).
Deadline for instant-asset write-off
The original deadline of the instant asset-write off scheme has been extended by six months, to 30 June 2021, to assets first used or installed ready for use costing less than $150,000. Assets must have been purchased by 31 December 2020.
Temporary full expensing
Businesses with an aggregated annual turnover of less than $5 billion may now be able to write off the business portion of the full cost of new eligible depreciating assets within the specified timeframe.
Small-to-medium businesses with an annual turnover of less than $50 million may also be able to claim a deduction for the business portion of eligible second-hand assets.
Depending on the size of your business, temporary full expensing could be claimed on assets that are new or second-hand, individual or multiple, subject to cost limits and some exclusions.
You may also be able to claim the cost of improvements made during this time on eligible assets.
Temporary full expensing allows a deduction for:
- the business portion of the cost of new eligible depreciating assets for businesses with an aggregated turnover under $5 billion or for corporate tax entities that satisfy the alternative test.
- the business portion of the cost of eligible second-hand assets for businesses with an aggregated turnover under $50 million.
- the balance of a small business pool at the end of each income year in this period for businesses with an aggregated turnover under $10 million.
Deadline for temporary full expensing
If you’re planning on claiming an asset through the new temporary full expensing measures, your asset must be purchased, and first used or installed and ready for use between 7:30pm AEDT on 6 October 2020 and before 30 June 2022 to be eligible.
Financing your assets can help
If you’re hoping to take advantage of the instant asset write-off in time but need funding, financing might be an option.