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Small business – Instant asset write-off

We present this update as a result of an announcement in the 2018/19 Federal Budget. This scheme was due to end on 30 June 2018 but the Government now announced an extension until 30 June 2019. The Budget has not yet been passed into law so the timing is uncertain.

Therefore we remind all small businesses (basic eligibility criteria is a turnover of less than $10 million) about the instant asset write-off.

Please note: Dates in the rest of this document refer to 2018 but depending on the extension coming into law, they could well apply to 2019.

Under the simplified depreciation rules, until 30 June 2018, you can immediately write-off depreciating assets costing less than $20,000 that were bought and used or installed ready for use. If an asset costs $20,000 or more it is “pooled” with other assets and receives a 15% deduction in the year you buy the asset and a 30% deduction each year after the first year.

It is also worth noting that for the 2018 financial year, you will be able to write off the balance of your small business “pool” if the balance (before applying the depreciation deductions) is less than the instant asset write-off threshold ($20,000). Obviously, this would not be the case if assets costing $20,000 or more have been purchased during the 2018 financial year.

Finally, when using the simplified depreciation rules, be mindful that you must use them to work out deductions for all your depreciating assets. Also, you must apply the entire set of rules, not just individual elements (such as the instant asset write-off).

There will be many aspects to consider for your personal circumstances, so please contact your Saward Dawson Business Adviser to discuss the possibilities for your business.