Using the simplified depreciation rules, assets costing less than the relevant instant asset write-off threshold are written off in the year they are first used, or installed ready-for-use. This threshold applies to each asset irrespective of whether the asset is purchased new or second-hand.
You can choose to use the simplified depreciation rules if you have a small business with an aggregated turnover of less than $10m from 01/07/16 onwards. If you are a business with a turnover from $10m to less than $50m you may be eligible for the instant asset write-off for assets purchased from 7.30pm (AEDT) on 02/04/19.
The threshold has changed over the last few years and during the current year as shown below.
Instant Asset Write-Off Thresholds
7.30pm (AEDT) 02/04/2019 to 30/06/2020 = $30,000 : Small Business Turnover <$50m
29/01/2019 to before 7.30pm (AEDT) 02/04/2019 = $25,000 : Small Business Turnover <$10m
7.30pm (AEST) 12/05/2015 to 28/01/2019 = $20,000 : Small Business Turnover <$10m
The entire cost of the asset must be less than the instant asset write-off threshold, irrespective of any trade-in amount. Whether the threshold is GST exclusive or inclusive will depend on your GST status.
In working out the amount you can claim, you must subtract any private use proportion. The balance (that is the proportion used in earning assessable income) is generally the taxable purpose proportion. While only the taxable purpose proportion is deductible, the entire cost of the asset must be less than the threshold.
Note that if you later sell or dispose of an asset for which you claimed an instant asset write-off, you include the taxable purpose proportion of the amount you received for the asset in your assessable income.
If you require any further information in relation to the Small Business Instant Asset Write Off please contact our office on 9387 5637.