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How the $150,000 instant asset write off scheme will assist you
March 13, 2020, 10:39 am
It’s the talking point of the world at the moment but the big news overnight is the Australian Government’s announcement to increase the asset write of scheme amidst increasing economic pressure.
What is it and how does it work you may ask? Well, here are some details below to help you understand the instant benefits to your company and how you can capitalise on the scheme.
As of Tuesday 12th March, the Australian Government has increased the asset write off scheme from $30,000 to $150,000, whilst increasing the eligible businesses with an aggregated annual turnover of $50 million to $500 million.
The Tax Institute’s senior tax counsel Professor Robert Deutsch said the expanded write-off would give businesses food for thought in the current economic climate.
“Businesses that are successful often act in this counterintuitive way and it’s the old Warren Buffett quote, ‘be fearful when others are greedy and greedy when others are fearful’,” Professor Deutsch told Accountants Daily.
“It may be an appropriate time for businesses to have the tenacity to actually make the investment and the government is doing its level best to encourage them to do so.”
Likewise, Chartered Accountants Australia and New Zealand (CA ANZ) tax leader Michael Croker said the supercharged instant asset write-off was a big win for businesses and would potentially drive purchases of more big-ticket items.
Businesses with a turnover of less than $500 million will also now be able to deduct an additional 50 per cent of the asset cost in the year of purchase, as the government looks to introduce a time limited 15-month investment incentive.
The incentive, set to run through to 30 June 2021, is set to cost the government $3.2 billion.
“Unlike the instant asset write off extension, this measure will be in place until 30 June 2021 and the value of the eligible asset is uncapped, meaning it could be very useful in encouraging investment in the post-crisis recovery,” said CPA Australia general manager of external policy Paul Drum.
*Our tip: If you have never heard of the scheme or are unaware of its benefits, speak to your accountant. If your accountant doesn’t know or has ever mentioned anything about it to you maybe start looking for another one…
Let’s get down to how it works for you.
If your business has an aggregated annual turnover less than 500 million and is purchasing an eligible asset, you are able to make a deduction on the taxable purpose proportion of the new asset. This is the proportion of your new asset that will be used for earning assessable income for your business. In order to find this amount, a subtraction of any private use proportion is necessary, which is the proportion of the time the asset will be used outside of the business. Remember, it is only the taxable purpose portion of the asset that is eligible for deduction and the entire cost of the asset must be of a value less than $150,000.
We look forward to constructively using the scheme moving forward and we hope you and your accountant are able to beneficially use it too. Our friends at Foodie Finance are also ready to lend a helping hand when you decide what new equipment is going to best assist your efficiency and cost saving needs.
If you are still confused or need more help we suggest you visit the Australian Tax Office website. https://www.ato.gov.au/
March 13, 2020, 10:39 am
Vanrooy are very pleased to be partnering up with EOI for an exciting and unique competition being held to give...Read More