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Small Business Instant Asset Write-off Changes

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Small Business Instant Asset Write-off Changes

Increase in the immediate asset write-off:

The budget has announced that from 2 April 2019- 30 June 2020 the threshold of $20,000 asset small business write-off will increase to $30,000. The threshold may potentially reduce to the original threshold of $1,000 from 1 July 2020, however the threshold has not been under $20,000 since 2015.

Increase in the small business entity threshold:

The amount of business that have access to the small business write-off will also increase, as the small business turnover threshold increases. Prior to the release of the budget businesses with an aggregated turnover of less than $10 million would qualify as a small business, now the threshold has increased to an aggregated turnover of less than $50 million.

Assets eligible for the immediate write off:

The eligible asset needs to be a depreciable asset purchased for $30,000 inclusive of GST for business not registered for GST or $30,000 exclusive of GST for businesses registered for GST.

The eligible asset needs to be purchased and ready to use between 2 April 2019 and 30 June 2020. Please note that assets purchased prior to 2 April 2019 will be subjected to the following small business write-off thresholds:

12/05/2015- 28/01/2019:              $20,000

29/01/2019- 2/04/2019:                $25,000

Treatment of assets over the threshold:

Small businesses that purchase assets over the small business instant asset write-off threshold can allocate the asset to a pool that is depreciation at 15% for the first year and then 30% thereafter.
One the balance of the pool is less then the small business threshold, then the balance can be written off.

<Author – Candace Grose>