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Budget Changes to the Instant Asset Write-off

With the Federal election in our mist and the war on budgets plastered all over the media you have probably heard a lot about the instant asset write-off changes.

Finally the Treasury Laws Amendment (Increasing the Instant Asset Write-Off for Small Business Entities) Bill 2019 has officially been passed by the Senate, House of Representatives and received its Royal Assent. This means that the proposed instant asset write-off changes are now in play for you to utilise.

So what does this mean for your business?

It’s great news, really! But it is unnecessarily complicated and one where you need to focus on the fine print. We will break down the finer details for you a little later and discuss all the tiers but first we want to explain the whole idea behind instantly writing-off your assets.

When you purchase an asset you get to claim the depreciation of that item over the next several years until the end of its effective life or you sell it. This usually translates to claiming depreciation for an asset decades after you purchased it. So each year you get to reduce your tax a little with this deduction. Think of it like eating a little slice of pie every year at tax time.

Now when you instantly write-off that asset instead of eating a little slice of pie – over several years, you get to eat the whole pie in the first year. Now stop dreaming about what kind of pie you are eating.

When you write-off your asset instantly, it gives you a greater tax deduction which means you pay less tax, and invest more assets and wealth into your business. This is really significant for our small and medium sized businesses because these businesses are in a very important ride or die stage of growth. The government actually gets this, which is nice, so they are willing to give you a tax break so that your business can grow.

Okay, let’s dig deeper into those finer details now.

The first tier is $20,000. You must have acquired this asset by 7.30pm (AEST) on the 28th January 2019. So if you purchased an asset worth $20,000 or less by this time you are eligible to instantly write it off in the financial year that you purchased it in (dating back to 12th May 2015).

The second tier is for an asset valued up to $25,000 and was purchased on the 29th January 2019 up until 7.30pm (AEST) on the 2nd April 2019.

The third tier that has just been introduced is $30,000. You could have purchased this asset after 7.30pm on the 2nd April 2019 until 30th June 2020.

I have conveniently summarised this in a table below.

We are hoping that these instant asset write-offs are going to stick around for a few years to help out our small and medium businesses who are effectively growing our economy.

How do you know if you are small or medium sized business who is eligible for these instant asset write-offs?

The ATO defines a small business by having an annual turnover less than $10 million. And a medium sized business is one earning more than $10 million but less than $50 million.

The instant asset write-offs are a really beneficial for our businesses in a growth spurt but they do rely a lot on compliance.

We are business advisory and tax specialists and we would love to help your small or medium  business with utilising these instant asset write-offs.

Contact us for assistance.


SIMMONS LIVINGSTONE & ASSOCIATES GENERAL ADVICE WARNING This information is of a general nature only and neither represents nor is intended to be specific advice on any particular matter. Simmons Livingstone & Associates and Infocus Securities Australia Pty Ltd strongly suggest that no person should act specifically on the basis of the information contained herein but should seek appropriate professional advice based upon their own personal circumstances.

Kris has over 16 years' experience in the business advisory, accounting and taxation industry. His initial years were spent with WHK Group and PKF before founding Simmons Livingstone & Associates in 2013.

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