1 May 2019
If you’re a small business, this is a great opportunity to consider acquiring assets to help your business flourish.
What it means for small businesses
The popular instant asset write off for small business has been extended and increased.
The new laws:
- increase the threshold below which small business entities can access an immediate deduction for depreciating assets and certain related expenditure (instant asset write-off) from $25,000 to $30,000; and
- now enable businesses with aggregated turnover of less than $50 million to access instant asset write-off for depreciating assets and certain related expenditure costing less than $30,000.
When to buy assets
Assets will need to be used or installed ready for use from Budget night until by 30 June 2020 to qualify for the higher threshold.
What assets are eligible?
Anything previously purchased does not qualify for the higher rate but may qualify for the $20,000 or $25,000 threshold. Similarly, anything purchased but not installed ready for use by 30 June 2020 will not qualify.
The instant asset write-off only applies to certain depreciable assets.
There are some assets, like horticultural plants, capital works (building construction costs etc.), assets leased to another party on a depreciating asset lease, etc., that don’t qualify.
For assets costing $30,000 or more
For small businesses (aggregated turnover under $10m), assets costing $30,000 or more can be allocated to a pool and depreciated at a rate of 15% in the first year and 30% for each year thereafter. If the closing balance of the pool, adjusted for current year depreciation deductions (i.e., these are added back), is less than $30,000 at the end of the income year, then the remaining pool balance can be written off as well.
The ‘lock out’ laws for the simplified depreciation rules (these prevent small businesses from re-entering the simplified depreciation regime for five years if they opt-out) will continue to be suspended until 30 June 2020.
Pooling is not available for medium sized businesses which means that the normal depreciation rules based on the effective life of the asset will apply to assets that don’t qualify for an immediate deduction.
When does this take affect?
The amendments apply from 7.30 pm legal time in the Australian Capital Territory on 2 April 2019 until 30 June 2020
What to do next
If you would like to take advantage of the instant asset write off scheme but need the finance to do so, the team at Shakespeare Leasing and Mortgage Solutions can help find you the right commercial asset loan for your businesses.
Contact Peter Elkerbout at Shakespeare Leasing and Mortgage Solutions on 08 9321 2111 peter.elkerbout@shakes.com.au for a free, no obligation consultation.
Source: KnowledgeShop 2019
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