2021 TAX TIME
Instant Asset Write Off: How to use it
The Australian Government announced that as part of the 2020-2021 Federal Budget the instant asset write-off would be increased by removing the $150,000 per asset limit.
These incentives are implemented in the hopes to boost the Australian economy during the ongoing COVID-19 pandemic.
So, What is the instant asset write-off scheme?
It enables you to write off the ENTIRE amount of asset purchases in the financial year they were purchased.
This scheme is not new, with it being first introduced in 2011 with a limit of $1,000 per asset, this limit has been raised over the years to benefit small & medium sized enterprises.
Recent updates to this scheme are:
- Eligible businesses: Those with an aggregated turnover of up to $5 billion annually.
- Asset limit: Temporarily, the scheme no longer has a limit per asset.
Benefits of the scheme:
- You can write off the ENTIRE asset in one year – removing the painstaking process of writing off a proportion of each asset year by year.
- Significantly decrease your taxable income and the tax you owe in the year the asset is purchased and installed.
What can I claim?
Pretty much anything that you purchase as an asset for business use, such as:
- New or used – Tools, Machinery, Equipment, Safety Gear & SO MUCH MORE!
- Upgrades to existing Machinery & Equipment
An example of the expanded instant asset write-off in action
Peter at ABC Welding Co. wants to update a few of his company’s welding machines to the latest all-in-one tech, so he can pump out his work quicker and with a more premium finish. On 31 March 2021, he buys a new state-of-the-art pulse welder for $16,000, exclusive of GST, and has it installed and operating by 15 May 2021. At the small business company tax rate of 26 per cent, Peter will reduce his tax bill by $4,160 as a result of the purchase.
Tristan at Fabricating Inc. wants to purchase a fully automated CNC machine to expand his business services in house, he knows that this investment will reduce his outsourcing costs and allow him to take on a wider variety of jobs. On 31 March 2021, he buys a complete CNC package, complete with table, plasma cutter, console & some great EOFY bonus perks for $150,000, exclusive of GST, and has it installed and operating by 15 May 2021. At the small business company tax rate of 26 per cent, Tristan will reduce his tax bill by $39,000 as a result of the purchase.
Am I eligible?
- Is you aggregate turnover less than $5 billion annually?
- Will the equipment be installed & used in Australia?
- Do you want to update your equipment to the latest & best solutions & fit for your business?
- Will your asset be purchased & installed before 30 June 2021?
If you answered yes, to all of the above you may be eligible for the instant tax write-off.
Get in touch with our team of product specialists to discuss the best solution for you and your work place, and make the most out of this tax time.
1300 211 200 | firstname.lastname@example.org
The above information is not intended as financial or investment advice and should not be construed or relied on as such. Before making any commitment of a financial nature you should seek advice from a qualified and registered financial or investment adviser.