Don’t Forget About the Write-off Concession of Assets Below $20,000

Business Tax

This measure was introduced as part of the Federal Budget on 12 May 2015 and continues until 30 June 2017, with the bas agent playing a crucial role in offering guidance throughout this period.

The conditions that need to be met to access the concession are as follows:

  • Assets must have been first acquired for use in your business after the start date to be eligible.
  • You can access the concession if you are a small business entity or sole trader (where your annual aggregated turnover is less than $2 million).
  • You can claim an immediate deduction for each eligible asset (new or second-hand) when the asset is used or installed and ready for use in your business.
  • If your business is GST-registered, the write-off threshold is the GST-exclusive cost of the asset, $22,000 (including GST). If your business is not GST registered, the threshold is GST-inclusive $20,000 (including GST).
  • The concession is applied on an asset-by-asset basis, even where the assets purchased are identical or form part of a set. Your supporting documentation needs to itemise each asset separately.
  • The cost threshold is unaffected by any trade-in, your relevant private use portion or any FBT effect.
  • In general, where a general small business pool value falls below $20,000 during the concession period, it can be written off.

The concession

  • It only accelerates the timing of a deduction you would have eventually got anyway (over the asset’s effective life).
  • The increased write-off provides a cash flow benefit by bringing forward your deductions.
  • You should apply standard commercial logic when considering any asset acquisition, notwithstanding you get a full tax deduction for it.

If you have any queries, please get in touch with our office.

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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