7th October, 2020
Any business making up to $5 billion can now write off any eligible expense immediately, in a complete transformation and expansion of the Instant Asset Write-off scheme.
The Federal Government announced that any business earning up to that amount can write off eligible expenses, at any cost, until June 2022.
The measure will apply to eligible assets purchased from 7:30pm (AEDT) on 6 October 2020 and first used or installed by 30 June 2022. The cost of improvements to existing eligible depreciable assets made during this period can also be deducted in full.
Referred to as ‘temporary full expensing’, the Government estimates 3.5 million businesses will be eligible for the scheme in a move set to encourage spending among businesses.
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Any business earning up to $5 billion can write off the full cost of any depreciable asset purchased between 6 October 2020 and first used or installed by 30 June 2022.
There are some extra changes and details to be aware of:
This is the second expansion of the limit in just this year alone. In March, the Government already increased the eligible amount for each asset up to $150,000 from $30,000. Now, the Government says there is no limit on asset prices.
“From tonight, over 99 percent of businesses will be able to write off the full value of any eligible asset they purchase for their business,” Treasurer Josh Frydenberg announced in his budget speech tonight.
“A trucking company will be able to upgrade its fleet, a farmer will be able to purchase a new harvester and a food manufacturing business will be able to expand its production line.”
Other eligible assets include computers, tablets, tools for use on a work site such as drills, ladders, tool boxes, equipment like a fridge or a grill, phones, point of sale systems, or anything else that is used in the running of a business.
The same rules apply to the previous Instant Asset Write-off scheme, which has been well received by small and large businesses alike.
As we’ve shared before, businesses need to follow certain rules to make sure they can claim the cost of any asset.
The asset needs to be purchased and installed within the time period the Government specifies – in this case, from 6 October 2020 up to June 2022. It needs to be ready for use – you can’t just have it lying around and then plan to install it a couple of years from now.
The increase is another reason why it’s so important for businesses to have their expense tracking and documentation under control.
Here are some tips we’ve prepared on how to make sure you claim an asset correctly. Keep in mind, these details my change as this is based on past eligibility criteria:
Join MYOB’s CEO Greg Ellis, ASBFEO Kate Carnell and SmartCompany’s editor-in-chief Peter Fray for a ‘2020 Budget Wrap’ webinar at 1.30pm on Thursday, 8 October to discuss how the budget will impact your business. Register today to book your place.