What is the $20K Instant Asset Write-off Accessible by Small Businesses?

If you purchase an asset before 1 July 2017 and it costs less than $20,000, you can immediately deduct the business portion in your 2017 tax return.

You are eligible to claim a deduction for the business portion of each asset (new or second hand) costing less than $20,000 if:

>you have a turnover less than $10 million (this has increased from $2 million), and

>the asset was first used or installed ready for use in the 2016-17 income year.

What about Asset purchases for more than $20K? (E.g. a new car)

Assets that cost $20,000 or more (which can’t be immediately deducted under other provisions) are deducted over time using the general small business pool. Under the pooling mechanism a deduction for 15 per cent of the cost is allowed in the first income year with a diminishing value rate of 30 per cent deduction on the opening pool balance allowed for each income year thereafter. This scenario would most likely apply to a new Motor Vehicle for example.

In the Budget 2017, the government announced an extension of the $20,000 instant asset write-off threshold to 30 June 2018. This extension still needs to be passed in parliament – the threshold currently reduces to $1,000 from 1 July 2017.

*This information is taken directly from the ATO website with the intention to be a quick and easy reference point for our clients. Should you have any queries, don’t hesitate to contact us.

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