Treasurer Scott Morrison looks set to extend $20,000 asset write-off for small businesses

You are eligible to use simplified depreciation rules and claim the immediate deduction for the business portion of each asset (new or second hand) costing less than $20,000 if:

• You have a turnover less than $10 million, and
• The asset was first used or installed ready for use in the income year you are claiming it in.

If you buy an asset and it costs less than $20,000, you can immediately deduct the business portion in your tax return.

It seems some tax agents have under-claimed by not applying all the simplified depreciation rules. To use simplified depreciation rules correctly you must:

• write off eligible assets costing less than $20,000 each
• pool most other depreciating assets that cost $20,000 or more
• write off the small business pool balance if it is less than $20,000 at the end of an income year
• Only claim a deduction for the portion of the asset used for business or other taxable uses.

The $20,000 write-off threshold now looks like it will extend until 30 June 2018

The instant asset write-off scheme is a real benefit to small businesses looking to acquire business or work-related capital equipment or assets. If eligible, the full amount of the asset up to the $20,000 limit cans we “written-off“ in one go. This will essentially reduce your Taxable income by the same amount.

What is my definition of the“Cost?”

The cost of an asset includes both the full price paid including transportation and installation cost. The cost can include amounts you spent on improvement or modification of the asset.

If you are registered for the goods and services tax (GST), you exclude the GST amount you paid on the asset when you calculate your depreciation amounts (and your instant asset write-off threshold is $20,000 exclusive of any GST). This is because you will claim the GST as an input credit for the relevant BAS period.

What Business assets could be eligible of the instant write off?

See more information including examples at ATO website (CLICK HERE)