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Amendments from the Federal Budget effective from 7.30pm 6 October 2020
As announced by the Treasurer, from 7.30pm (AEDT) on 6 October 2020 until 30 June 2020, businesses with a turnover up to $5 billion will be able to deduct the full cost of eligible depreciable assets of any value in the year they are installed. The cost of improvements to existing eligible depreciable assets made during this period can also be fully deducted.
Please note that these announcements are not legislated at this time and we will provide more detail as these amendments are formalised.
Amendments from Economic Stimulus Measures effective from 12th March 2020
The instant asset write off threshold was increased from $30,000 to $150,000 effective from 12th March 2020 through until 30 June 2020. This increase in the threshold was subsequently extended to 31 December 2020. In addition to the threshold increase access to the write off was extended to businesses with an annual turnover of less than $500 million (up from the previous $50 million threshold).
Immediate Asset Write-Off rules updated on 2 April 2019
On 24 March 2020, the ATO passed the “Coronavirus Economic Response Package Omnibus Bill”, which focuses on providing support to businesses affected by COVID-19.
Included in this Bill was increasing the instant asset write-off threshold for the year ended 31st December 2020.
To be eligible to apply the instant asset write-off depends on the following:
- Your aggregated business turnover
- The date you purchased the assets
- When it was first used or installed ready for use
- The cost of the asset being less than the threshold
Please refer to the below table for the dates and thresholds applicable to each asset purchase.
|Instant asset write-off thresholds|
|Eligible businesses||Date range for when asset first used or installed ready for use||Threshold|
|Less than $500 million aggregated turnover||12 March 2020 to 30 June 2020||$150,000|
|Less than $50 million aggregated turnover||7.30pm (AEDT) on 2 April 2019 to 11 March 2020||$30,000|
|Less than $10 million aggregated turnover||29 January 2019 to 7.30pm (AEDT) on 2 April 2019||$25,000|
|Less than $10 million aggregated turnover||1 July 2016 to 28 January 2019||$20,000|
Exclusions and limits
The following assets are excluded from using the instant asset write-off:
- assets that are leased out, or expected to be leased out, for more than 50% of the time on a depreciating asset lease
- assets you allocated to a low-value assets (pool) before using the simplified depreciation rules
- horticultural plants including grapevines
- software allocated to a software development pool (but not other software)
- capital works deductions.
In addition, if you purchase a car (a passenger vehicle, except a motor cycle or similar vehicle, designed to carry a load less than one tonne and fewer than nine passengers) for your business, the instant asset write-off is limited to the business portion of the car limit of $57,581 for the 2019–20 income tax year.
For more information on the eligibility or application of the Instant Asset Write-off and how this may affect you, please contact your Davidsons team member or call our office on 03 5221 6399 to speak with a Tax and Business Services Specialist.
Disclaimer: this information is of a general nature and should not be viewed as representing financial advice. Users of this information are encouraged to seek further advice if they are unclear as to the meaning of anything contained in this article. Davidsons accepts no responsibility for any loss suffered as a result of any party using or relying on this article.