Are you eligible for the $20,000 instant tax write off?
It should be made very clear that the instant tax write off of any assets purchased prior to 30th June 2016 costing less than $20,000 each is NOT a cash refund. You may be eligible to claim the amount of the asset in full as a deduction to reduce your taxable income only.
Broadly, the immediate write-off is available to businesses which have an “aggregated turnover” of less than $2 million. If you are part of a group of companies this can get a little complex.
If you place an order at year end for an asset in which possession will be taken in the following income year will not qualify for an immediate deduction until that following year.
Can a deduction be claimed for second hand assets?
Yes – the measures will apply to new and second hand asset. This is stated in the Tax Office’s fact sheet.
What are the most common types of Assets that a business may acquire?
Motor Vehicles – There are many small cars that cost $20,000 or less. It is very important to note that if you trade-in a car and the difference is $20,000, you are not eligible for the instant tax write off.
Computers, tablets and electronic devices – This category is the most common expense that many business operators would be more inclined to spend and receive the instant deduction
Tools and Equipment – For many trade persons, there is the opportunity to also buy new or second tools or equipment to fall within the guidelines
For more information go to the Australian Tax Office website www.ato.gov.au