$150,000 Instant Asset Tax Write-Off

‍Since its introduction, thousands of businesses have taken advantage of the (currently) generous instant asset write-off legislation. As the title above suggests (and you may already be aware), the deduction available for the asset is currently capped at $150,000, but there is currently no limit to the cost of the asset (see below for more on this).

Unfortunately, all things must end, and this piece of legislation is no different…

In May 2021 as part of the Federal Budget for 21-22, the government announced an extension of the InstantAsset Write Off to June 30, 2023. Despite the looming end to the opportunity to claim the write-off to the full value, there’s still time.

How does it work?

Temporary full expensing (TFE) allows businesses to deduct the full cost of eligible capital assets from their profits for the year, rather than depreciating the cost over several years. So in essence, you can deduct up to $150,000 per asset purchased in the financial year of which you are lodging.

 Here are some of the specifics:

• The asset must be purchased and in use during the year in which you are claiming the deduction.

• Depreciating assets may include new business vehicles and equipment. For businesses with aggregated turnover of less than$50 million, the assets can be second-hand or new. Businesses with an aggregated turnover of up to $5 billion may also be eligible, but we strongly advise a discussion with the Attune team prior to purchase to ensure eligibility.
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What assets are claimable?

In order to deduct an eligible asset you’ll also need to ensure there’s room in your taxable income to deduct from, you then should understand what assets are eligible for the Instant Asset Write Off… For example:

·      fixtures and fittings (such as shop or cafe fit-outs)

·      technology, such as laptops, computers, EFTPOS systems and securityequipment

·      tools, plant and equipment

·      office furniture

·      motor vehicles such as utes, delivery vans and most cars(deductions for these are capped at a certain limit each financial year –$64,741 in 2022/23)

·      motorbikes

·      solar systems.
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As you can see by this list, there are limits in some areas, most especially motor vehicles. Here are details of some of the exclusions:

·      ‘Expensive’ cars (for the 2022/23 financial year, this means cars costing more than $64,741)

·      Buildings and other assets that are eligible for capital works deductions

·      Assets located overseas

·      Some primary production assets (such as fencing and water facilities)that already have an existing instant write-off scheme in place

·      Assets that are not used in a business.

And of course, you must be able to show that the asset is used as part of your business – this includes the percentage of business use if it is a motor vehicle. Generally, a log book will allow us to convert your kilometres into a business use and thus deductible percentage.

I need a new business asset, what do I do?

If you’ve identified a need in your business for a new asset, we suggest you contact the Attune team first so we can assess your situation against what is possible so we can guide you toward the best outcome.Essentially, we’ll go over your financial situation and discuss the asset in question before offering advice on a price cap and ultimately how much can be deducted.

For more about the Instant Asset Write Off and your eligibility, call Attune on 1300 866 113 or send us an email to start the conversation. And don’t delay, there’s not long left until the June 30 deadline arrives!

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