Instant Asset Write Off is Back!

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There is currently legislation in the Senate to make changes to the current year’s Instant Asset Write Off (IAWO) Thresholds.

You might remember that the Australian Taxation Office (ATO) had decreased the concessions available under the IAWO rules effective from 1 July 2023. In particular, the thresholds of turnover you had to be below to access the concessions, and the cost of the plant and equipment had to be below to be able to claim it all upfront, were decreased significantly. The change in rules at 1 July 2023 meant you had to have turnover below $10M to be able to write off assets immediately, and the cost of the plant and equipment had to be below $20,000.

The proposed legislation, which is expected to be passed in the coming weeks will make changes to these thresholds and make it significantly more attractive to invest in plant and equipment. It also allows the new thresholds for the whole of the 2024 financial year, effectively backdating the concession to 1 July 2023.

The proposed changes are as follows:

  • IAWO of eligible plant and equipment is allowed where the cost is less than $30,000 (up from $20,000)
  • This concession is available for businesses with aggregated turnover of less than $50M (up from $10M)
  • The concession is available for the entire 30 June 2024 financial year – meaning any plant and equipment first used, or installed ready for use, from 1 July 2023 onwards will be eligible for the increased thresholds.

This is a significant increase in the concessions and eligible businesses should take note and potentially utilise the increased concessions running up to 30 June 2024.

Remember that it is only businesses that can access the IAWO concessions. If you have structured your group so that plant and equipment are housed in a separate entity to the business entity, and it is leased to the trading business entity, the IAWO concessions will not be available to that entity. It will instead have to depreciate the plant and equipment as you normally would where you are not in business.

We will be in touch with clients running up to 30 June to discuss this, and any other tax planning opportunities available to you.

If you have any queries in relation to the above concession don’t hesitate to contact your client manager.

Author: Michael Goodrick

*Correct as of 23 April 2024

*Disclaimer – Kreston Stanley Williamson has produced this article to serve its clients and associates. The information contained in the article is of general comment only and is not intended to be advice on any particular matter. Before acting on any areas in this article, you must seek advice about your circumstances. Liability is limited by a scheme approved under professional standards legislation.

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