# Instant asset write-off extended to 31 December 2020



## Jack Malarkey (Jan 11, 2016)

ABC Australia:

Tuesday 9 June 2020

https://www.google.com.au/amp/s/amp.abc.net.au/article/12334398
*Instant Asset Write-Off tax boost extended for another six months amid coronavirus pandemic*

By political reporter Jordan Hayne

Businesses making up to $500 million per year will be allowed to continue writing off newly purchased assets worth up to $150,000 under an extended scheme designed to boost cash flow.

*Key points:*

The new rules for the Instant Asset Write-Off scheme will be extended to the end of the year
Eligible businesses are able to instantly deduct the cost of assets worth up to $150,000
Treasurer Josh Frydenberg says the scheme will help businesses recover from the coronavirus crisis


In March, the Federal Government massively expanded the scope of the Instant Asset Write-Off scheme in the early stages of the coronavirus economic shock.

The scheme changed from allowing businesses making $50 million per year to write off purchases up to $30,000, to businesses making $500 million per year being allowed to deduct purchases worth up to $150,000.

Today Treasurer Josh Frydenberg said that arrangement, which was due to end on July 1, would remain in place until the end of the year.


"We do know that there are businesses that are ready to invest right now," he said.

"When the restrictions are eased and people are back at work, our cafes and restaurants will be busy.

"Our hotels will have occupants again and our businesses will be able to export and import again, and they need the equipment and they need the machinery."

Without the scheme, businesses would have to deduct the depreciation of their assets over several tax returns.

But with the scheme in place, eligible businesses can deduct the full cost of purchases up to $150,000 from the amount of tax they pay in the financial year the asset is purchased.


The scheme can be applied to multiple assets worth up to $150,000, with the Government saying 3.5 million businesses would be able to benefit from the scheme.

The Government said it could not provide information on how successful the expanded scheme had been in recent months because that information was gleaned from businesses' tax returns, which had not yet been filed.

"Hundreds of thousands of business have taken up the program in its previous format," Mr Frydenberg said.

"We will see that level of take-up once the end of the financial year arrives."


Without today's intervention, the scheme was set to shrink substantially next month, only allowing the writing off of assets worth less than $1,000 by businesses earning less than $10 million per year.

Deputy Labor leader Richard Marles welcomed the announcement.

"The idea that this was going to stop at the end of June was always ridiculous, so it's good that the Government has seen sense here and that this is being extended through to the end of the year," he told Sky News.

"It's a good step in the right direction and so the Government deserves to be applauded for it."

The scheme's expansion is projected to cost $300 million over the next four budget years.


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## Jack Malarkey (Jan 11, 2016)

The car depreciation limit ($57,581 for 2019-20) still applies:

https://www.ato.gov.au/Tax-professi...ax/Instant-asset-write-off-and-the-car-limit/.

The car depreciation limit for 2020-21 hasn't yet been announced.


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## Boofhead (Oct 19, 2016)

Second hand cars still OK?


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## Jack Malarkey (Jan 11, 2016)

Boofhead said:


> Second hand cars still OK?


Under the instant asset write-off, yes.

*NEW AND SEPARATE POST *

Treasurer's media release:

9 June 2020

*Extending the instant asset write-off*

Joint media release with
Senator the Hon Michaelia Cash
Minister for Employment, Skills, Small and Family Business

The Morrison Government continues to back small business with the announcement that it will extend the $150,000 instant asset write-off for six months to 31 December 2020.

Australian businesses with annual turnover of less than $500 million will be able to take advantage of this extended timeframe to invest in assets to support their business as the economy reopens and Coronavirus health restrictions continue to be eased.

These measures will support over 3.5 million businesses. They are designed to support business sticking with investment they had planned, and encouraging them to bring investment forward to support economic growth over the near term.

The instant asset write-off also helps to improve cash flow for businesses by bringing forward tax deductions for eligible expenditure. The threshold applies on a per asset basis, so eligible businesses can immediately write-off multiple assets provided each costs less than $150,000.

The extension will also give businesses additional time to acquire and install assets, as they will now have until the end of the year.

Assets can be new or second hand and could include for example a truck for a delivery business or a tractor for a farming business.

Legislative changes will be made to give effect to this measure, which is estimated to have a cost to revenue of $300 million over the forward estimates period.

Hardworking Australian businesses can rest assured that the Morrison Government will do all that is necessary to support them to bounce back stronger and get to the other side of this crisis.

(https://ministers.treasury.gov.au/m.../media-releases/extending-instant-asset-write)


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## Jack Malarkey (Jan 11, 2016)

The extension of the instant asset write-off by six months to 31 December 2020 will require legislative amendments but this will be expedited.

Both the House of Representatives and the Senate will sit from Wednesday 10 June 2020 to Friday 12 June 2020 and from Monday 15 June 2020 to Thursday 18 June 2020.

(https://www.pmc.gov.au/sites/default/files/publications/parliamentarysittings-2020.pdf)


*NEW AND SEPARATE POST

Information about the instant asset write-off:*

https://www.ato.gov.au/Business/Dep...n-for-small-business/Instant-asset-write-off/.


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## the lone ranger (Jun 23, 2019)

Great, but don't you actually have to make a profit before there is any tax advantage?


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## Jack Malarkey (Jan 11, 2016)

the lone ranger said:


> Great, but don't you actually have to make a profit before there is any tax advantage?


It helps but isn't required in all cases.

The deduction can create or increase a net business loss available to be offset against other income in the current income year provided the non-commercial losses rules don't apply.

The non-commercial losses rules don't apply if you have assessable business income of at least $20,000 (or part-year equivalent):









Non-commercial losses


See how you may be able to offset your business loss against other income if you're a sole trader or in a partnership.




www.ato.gov.au




.

That said, the instant asset write-off is often not the most advantageous choice for depreciation claims.


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## Jack Malarkey (Jan 11, 2016)

If you plan to use this extension of the instant asset write-off to buy a new or second-hand car, note that Thursday 31 December 2020 falls during a period of public holidays and Christmas shut-downs.

To be eligible, you’ll need to have first used your car or have had it delivered for use by 31 December. In other words, you must have RECEIVED your car by 31 December: it’s not enough that you have ordered and paid for the car by that date.

The more cautious may find it prudent to ensure that all is done and dusted by early December (assuming that the 31 December date isn’t further extended).


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## Jack Malarkey (Jan 11, 2016)

Before claiming the instant asset write-off, it's important to do some quick calculations to ensure it's advantageous for you to do so: it isn't always.

Take, for example, a driver with a taxable income (excluding depreciation) of $50,000 per year who purchases a car costing $45,000.

By claiming the $45,000 as $9,000 a year over five years, the driver will have a total tax saving (including Medicare levy) over the five years of about $15,525.

But the same driver claiming all of the $45,000 as the instant asset write-off will have a tax saving of about $8,433 (or $7,092 less).

By claiming over five years, this driver saves 34.5 cents in the dollar but by claiming the instant asset write-off saves a combination of 34.5 cents, 21 cents and nil cents in the dollar in tax.

Also be careful if your assessable income (ie, gross income subject to tax) from rideshare is under $20,000 and claiming the instant asset write-off would create or increase a net business loss.

In these circumstances, the non-commercial losses rules would be likely to prevent you from offsetting the loss against other income and oblige you to quarantine it for offset against business income in future years.

Individual income tax rates:

*Individual income tax rates*
These rates show the amount of tax payable in every dollar for each income bracket for individual taxpayers.

.

Non-commercial losses rules:

*Non-commercial losses*
If you're an individual in business as either a sole trader or in a partnership and your business makes a loss you may be able to offset this against your other income such as salary and wages.

.


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## Jack Malarkey (Jan 11, 2016)

Jack Malarkey said:


> The car depreciation limit ($57,581 for 2019-20) still applies:
> 
> https://www.ato.gov.au/Tax-professi...ax/Instant-asset-write-off-and-the-car-limit/.
> 
> The car depreciation limit for 2020-21 hasn't yet been announced.


The car depreciation limit limit for 2020-21 is $59,136:

*ATO: Cars and tax*
.


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## Slightly offensive (Jan 12, 2020)

Hi Jack,
I bought a car in Dec 2019 for $15,000. Am I still able to use the instant asset write off?


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## Jack Malarkey (Jan 11, 2016)

Slightly offensive said:


> Hi Jack,
> I bought a car in Dec 2019 for $15,000. Am I still able to use the instant asset write off?


Yes, but only in your 2019-20 income tax return.


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## Slightly offensive (Jan 12, 2020)

Jack Malarkey said:


> Yes, but only in your 2019-20 income tax return.


Thank Jack👍


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