EXTENSION OF INSTANT ASSET WRITE OFF TO THE END OF 2020

EXTENSION OF INSTANT ASSET WRITE OFF TO THE END OF 2020

Today, the Treasurer Josh Frydenberg has announced that the Government intends to extend the timeframe and the thresholds for the instant asset write off from when the first economic stimulus measures were announced.

The measures were intended to end on 30 June 2020 and then only apply to assets that cost less than $30,000. A write off will continue to exist for assets acquired for less than $150,000 until 31 December.

In order to qualify for the increased threshold a business must:

  1. turnover less than $500 million dollars;
  2. acquire an asset that costs less than $150,000, including any private portions; and
  3. install that asset ready for use by 31 December 2020.

Whether the acquisition threshold of $150,000 is inclusive or exclusive of GST depends on your GST registration. A business not registered for GST would have a GST inclusive acquisition threshold. A business registered for GST would have an acquisition threshold exclusive of GST.

We also note that the threshold applies to plant and equipment. Capital improvements are not included in the threshold. Please note that the instant asset write off maintains the cost limit of passenger cars to $57,581 for depreciation purposes. Any vehicle designed for commercial purposes, will be eligible for the increased threshold.

The biggest impediments to accessing the concessions have been firstly that a business would need the cash or the finance to acquire the asset and that the asset must be installed ready for use by 30 June 2020. Note that installed ready for use, in its simplest form, means that the plant and equipment is up and running before the cut-off date. It is not enough that the plant was ordered before that time.  The extension in the cut off date provides more scope to allow businesses to plan to buy any needed plant and equipment.

We see this measure as welcome for those businesses that can now afford to acquire equipment they need, that they may have held off from acquiring when the economic shutdown was first announced.

If you require assistance with assessing whether you can obtain finance or would like speak with an asset broker please contact us.

We will share more information in respect to the stimulus measures as they become available.

Please contact any of your client service team if you would like to explore the merits of utilising this concession in your business on (03) 8602 6100.