Instant Asset Write-Off a Win for Small Business

Instant Asset Write-Off a Win for Small Business

In what is great news for small business, the Australian Government has extended its $150,000 instant asset write-off until 31 December 2020.

The Government has also lifted the eligibility criteria to include Australian businesses with an annual aggregated turnover of $500 million. This is up from the previous limit of $50 million.

The six-month extension is going to significantly help small businesses hit hard this year by the COVID-19 pandemic. The write-off will help businesses’ cash flow by bringing forward tax deductions for eligible business expenses.

The extension will also give businesses additional time to acquire and install assets. They will now have until the end of the year.

Valorium Advisors believe the extension of the scheme is going to be a benefit to many of our clients who have been hit hard by the social distancing restrictions and forced shutdowns during 2020 due to coronavirus.

Apart from giving businesses more time to claim the write-off, the government says the extension will help those that have been hit by supply chain delays caused by the pandemic. Businesses now have more time to buy and start using new assets, it’s also hoped the initiative will give the economy a boost.

The $150,000 upper limit applies on a per asset basis. Meaning eligible businesses can write off several assets, both new and second-hand, at the same time.  

Making the most of the instant asset write-off

The Valorium team is encouraging our clients to consider how they can take advantage of the temporary extension. By thinking creatively businesses have a great opportunity reinvigorate their offering.

For example, clients in the hospitality industry could consider investing in a vehicle to develop greater capacity to build on the growth in food and drink home delivery that has resulted from the COVID-19 restrictions.

Our tradie friends should take some time to consider the current state of their essential equipment. Ask themselves if an upgrade is due. Perhaps their current dual-cab ute has seen better days and a new or second-hand 4×4 is something to think about.

Now that hair and beauty salons are almost back to normal, is it time to consider installing new equipment or giving their space a makeover?

Make a booking with Valorium Advisors

We encourage all our small business clients to take some time to consider how they can benefit. Book a time to talk through your ideas with one of the Valorium team.

Before you do, consider the following tips from the Australian Tax Office to help you claim your instant tax write-off:

  • Check if you’re an eligible business.
  • Both new and second-hand assets can be claimed, provided each asset costs less than $150,000.
  • Assets must be first used or installed ready for use between 12 March and 31 December 2020.
  • A car limit applies to passenger vehicles. The limit is $59,136 for the 2020–21 income year.
  • If your asset is for business and private use, you can only claim the business portion.
  • Different eligibility criteria and thresholds apply to assets first used, or installed ready for use, prior to 31 December 2020.

You can read more about the instant asset write-off, including exclusions and limits, here.

A quick note, on the Government’s revised timetable. From 1 January 2021 the write-off is due to be scaled down dramatically. This reduces to a threshold of $1,000. Eligibility is also being confined to small businesses with an annual turnover below $10 million. Considering a business purchase during the instant asset write-off extension period? Contact us today to discuss your eligibility. 

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