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$150,000 Instant Asset Write Off

April 2, 2020

The Australian Government has recently announced a new economic threshold to help hardworking businesses.

 

So from now, until 30th June 2020, you can take advantage of a $150,000 instant asset write-off!

100% Instant Asset Write-Off:

  1. Applies to assets with an individual purchase price of less than $150,000 excluding GST (increased from previously $30,000).

  2. Valid for ABN registered businesses with revenue turnover of less than $500 million (increased from $50 million).

  3. 100% tax write-off in the current tax year ending 30th June 2020. Customers must take delivery prior to this date. This incentive expires on 30th June 2020.

  4. No limit on how many assets are claimed.

  5. Applies to both new and used assets.

Case Sample: 

Business benefits from increased turnover threshold

Samantha owns a company, Sam’s Specialty Roasters Pty Ltd, through which she operates a large food processing business in Brisbane. Sam’s Specialty Roasters Pty Ltd has an aggregated annual turnover of $150 million for the 2019‑20 income year. On 1 May 2020, Samantha purchases five new conveyor belts for her production facility for $40,000 each, exclusive of GST, for use in her business.

Under existing tax arrangements, Sam’s Specialty Roasters Pty Ltd is not eligible for the instant asset write‑off and instead would depreciate the conveyor belts using an effective life of 15 years. Choosing to use the diminishing value method, Sam’s Specialty Roasters Pty Ltd would claim a total tax deduction of $4,456 for the 2019‑20 income year.

Under the new $150,000 instant asset write‑off, Sam’s Specialty Roasters Pty Ltd would instead claim an immediate deduction of $200,000 for the purchase of the conveyor belts (i.e. $40,000 for each conveyor) in the 2019‑20 income year, $195,544 more than under existing arrangements. At the company tax rate of 30 per cent, Samantha will pay $58,663.20 less tax in 2019‑20.

This will improve Sam’s Specialty Roasters Pty Ltd’s cash flow and help her business withstand and recover from the economic impact of the coronavirus.

 

 

For more information click here.

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