The government has recently announced an increase to the Instant Asset Write Off, increasing the threshold to $30,000.00. This applies to assets ‘first used or installed, ready to use’ between 3rd April and 30th June, 2019.
Typically any asset purchased for a business is able to be depreciated over a defined time period, depending upon the type of asset and the method of depreciation employed. This legislation means that rather than depreciating an item over time, the depreciation may be claimed in the 2019 financial year – this in essence means that you may receive the tax benefit now!
At the current company tax rate of 27.5%, a $30,000.00 asset purchase today may result in a reduction to your 2019 tax bill of close to $9,000.00
Points to consider:
- The asset must be primarily utilised for business purposes. If the asset is for both business and personal use, the proportion of use attributed to business may be claimed. For example, if you purchase a vehicle for your business, that is utilised for work related activities 70% of the time, you would be able to write off $21,000.00, rather than $30,000.00
- The business must be turning over less than $50,000,000.00, and currently be trading
- The asset must be ready to use – i.e. the asset cannot be paid for today, and delivered outside the claimable period. Likewise it cannot be delivered during the claimable period, and commissioned afterwards
Each business has different requirements in terms of working capital, and benefits will vary based upon circumstances.
To find out more about the Instant Asset Write Off, and how you may benefit, contact one of the team at Flexible Capital today.