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The Instant Asset Write Off is a major tax reform measure introduced by the Australian Government in the 2017-2018 budget. The Instant Asset Write Off allows small businesses to instantly deduct assets under $150,000 (up from $30,000) from their balance sheet and all other taxpayers can claim an immediate deduction for depreciating assets costing less than $150,000. 

This article will discuss how this new legislation affects you as a taxpayer and some of the advantages that it may provide your business with.

How is this different from the previous Asset deduction rules?

Recent changes

For assets first used or installed ready for use between 12 March 2020 until 30 June 2021, and purchased by 31 December 2020, the instant asset write-off:

  • – threshold amount for each asset is $150,000 (up from $30,000)
  • – eligibility extends to businesses with an aggregated turnover of less than $500 million (up from $50 million).

What are the benefits of this?

The Instant Asset Write Off is a great way for small businesses to get an immediate tax deduction on assets that they have recently purchased, as it means less money will be spent on depreciation in years to come. For example, if you purchase $20,000 worth of new equipment with your business and instantly write off.

What about items that cost more than $150,000?

Assets that you buy in this year that are $150,000 or more can be put into a pool. They can then be depreciated and deducted. But they will be at different rates. You should find out from your Accountant or Tax Advisor more about what works for you.

Does this mean I get a $150,000 tax refund for each asset?

You may be able to take more money from your company. This is called the “$150,000 Instant Asset Write Off scheme” and it can reduce your tax. If your business is structured as a company, you will only get 27.5% back.


Eligibility to use instant asset write-off on an asset depends on:

  • – your aggregated turnover (the total ordinary income of your business and that of any associated businesses)
  • – the date you purchased the asset
  • – when it was first used or installed ready for use
  • – the cost of the asset is less than the threshold.

What about Assets that are also used personally?

If you buy an asset for your business that you also use personally, then you can only write off the percentage of the cost that is used for business purposes. For example, if you buy a van for your florist business that is used 80% of the time and 20% of the time it is being used by someone else

Additional points to consider before rushing out to purchase Assets

Assets must be ready for use: To qualify for the $150,000 Instant Asset Write Off, they must be either installed and in-use or purchased and ready to use within the same financial year. This means that you can’t claim it for a purchase finalized in June 2021 but won’t be operational until September 2021, for example.

How long will the Instant Asset Write Off be available? 

Initially launched in the 2015/16 financial year, the Federal Government has continued to extend the scheme on a year-by-year basis.

The Government may not continue the scheme. So this could be your last chance to get a larger threshold in 2021/22

To qualify for the instant asset write-off, your entity needs to be a small business with an aggregated turnover of less than $50 million. The individual or entity that purchases the asset must also run its own trading business.

Is every business asset eligible to write off?

No. The ATO has excluded some types of assets like capital works assets and horticultural plants.

Exclusions and limits

A car limit applies to the cost of passenger vehicles.

There are also a small number of assets that are excluded.

Excluded assets

Car limit

A car limit applies to the cost of passenger vehicles (except a motorcycle or similar vehicle) designed to carry a load less than one tonne and fewer than 9 passengers.

The car limit is:

$59,136 for the 2020–21 income year

$60,733 for the 2021–22 income year.

The one-tonne capacity is the maximum load your vehicle can carry, also known as the payload capacity.

The payload capacity is the gross vehicle mass (GVM) as specified on the compliance plate by the manufacturer, reduced by the basic kerb weight of the vehicle.

The basic kerb weight is the weight of the vehicle with a full tank of fuel, oil and coolant together with a spare wheel, tools (including jack) and factory-installed options. It does not include the weight of passengers, goods or accessories.

Payload capacity = GVM – basic kerb weight

The car limit does not apply to vehicles modified for use by people with disability.

You cannot claim the excess cost over the car limit under any other depreciation rules.

But don’t forget that it is limited to the business portion of the asset.

Does GST Still Apply?

If you are registered for GST and can claim the full GST credit, you exclude the GST amount you paid on the asset when calculating car depreciation amounts.

If you are not registered for GST, you include the GST amount you paid on the asset in car depreciation calculations.

For more information visit ATO website.

If you would like more information about how Bee Sure Financial can help you contact us today on 0434 113 962.

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