The government has extended the instant asset write off to December 31. Here’s what you need to know and why you should be considering buying your business products now.
Are you a small business owner? Tick! Do you have an annual turnover of less than $500 million? Tick! Then the great news is your business is eligible for the instant asset write-off.
What is the instant asset write-off?
The instant asset write-off allows small businesses to claim immediate deductions on depreciable assets purchased for use by/in the company up to a value of $150,000. The deductions can be claimed for multiple items as long as the cost of individual items does not exceed $150k.
Previously set to expire on July 1, 2020, the Morrison government has extended the tax deduction to December 31, 2020, as part of a swathe of relief efforts to combat the impact of the coronavirus crisis.
Initially introduced in 2015 at a value of $20k for businesses with a turnover of less than $50 million, the scheme proved so popular the government had already extended its range twice, pre-COVID-19.
What can I claim?
Small businesses can claim everything from new equipment like a laptop or point of sale device to a modern fit-out, furniture, office supplies or even a vehicle. A deduction can be applied long as the individual price of each item is less than $150k. Before the introduction of the instant asset write-off, businesses could only claim an immediate deduction for items valued up to $1000. The rest had to be written off partially each year, dependent on the depreciation rate. Thanks to the recent updates to the instant asset write-off, businesses can now claim the deduction ‘instantly’ in the same income year – considerably reducing the tax payable for the year. The scheme has traditionally led to a flurry of sales in office equipment at the end of the financial year.
“In June we typically see an increase in demand across a range of products such as desks, chairs, laptops and monitors. These are traditionally purchased by our business customers who are eligible to claim these products as tax deductions,” said Jim Berndelis, General Manager -Merchandise, at Officeworks.
“With the shift in Australians moving from the traditional office environment to working from home, we’ve seen an increase in demand for other products such as home printers, computer accessories, cables and consumables like ink and toner.”
However, there are limits to what you can claim, and it’s important to note there are some exclusions. So be sure and check-in with the ATO or your accountant.
Is it time to equip your home office?
Absolutely! With six more months to take advantage of the instant asset write-off – there is still an opportunity to snap up a bargain and claim it against your tax bill. The pandemic has prompted a fundamental shift in the way people work. Millions of workers forced to work at home may be ill-equipped. Why not upgrade your tech equipment and furniture now to take advantage of the scheme as there is no guarantee the government will extend the write-off past December 2020.