The ATO recently announced an extension to the $150,000 Instant Asset Write-Off, up until 31 December 2020. The write-off allows businesses to write off any asset up to the value of $150,000 as an immediate deduction instead of depreciating it.
As a rule, if an asset is valued at more than $1,000 it would need to be depreciated over its life. However, due to this write-off, any asset that is installed and ready for use as at 30 June 2020 can be claimed as an immediate write-off in your 2019/20 Tax Return. This applies mainly to machinery, tools and equipment. Capital items such as a shed, concrete driveway, mezzanine still need to be depreciated at 2.5% and can’t be claimed as an immediate write-off.
So what if you purchase a vehicle, say a BMW, through the Instant Asset write-off, and use it from time to time for personal use? It’s a little more complicated than it might immediately seem. We’ve put together this reference image to help illustrate the factors for you to consider:
What to do now?
If you are looking to purchase a vehicle through your business that is not a 100% commercial vehicle, we would encourage you to get some good accountant advice and speak to our Airlie Beach or Sunshine Coast accountants as soon as possible. That way you won’t miss out on the Instant Asset write-off, and they can work with you to make sure you don’t incur FBT.