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COVID-19 INSTANT ASSET WRITE-OFF

COVID-19 INSTANT ASSET WRITE-OFF

The increased Instant Asset Write-Off threshold offers cash flow assistance for businesses by allowing an immediate deduction on purchases of eligible assets, each costing less than $150,000.

Eligible business can write-off a number of assets as long as the $150,000 threshold is applicable on a per asset basis.

ELIGIBILITY

The business eligibility criteria for the instant write off is as follows:

  • Business aggregated turnover which encompasses the total income of the main entity including all other associated businesses

  • Purchased date of the asset and the associated first used or installed ready for use date

  • Purchase price of the asset being less than the threshold (please refer to the below)

TIMING

The $150,000 Covid-19 instant asset write-off is applicable from 12 March 2020 until 30 June 2020, for new or second hand assets first used or installed ready for use throughout this period.

Last week it was announced that the $150,000 instant asset write off has now been extended until the 31st of December 2020.

THRESHOLD

There has been a number of changes relating to the instant asset write-off eligibility criteria and threshold amounts.

Please refer to the following table to check your eligibility and to make sure that the correct threshold is utilised.


EXCLUSION - MOTOR VEHICLES

If a motor vehicle is purchased through the business (a passenger vehicle, except a motor cycle or similar vehicle, designed to carry a load less than one tonne and fewer than nine passengers) the car limit restriction applies.

The car limit for the 2020 financial year is $57,581.

Motor vehicles can only be depreciated up to the car limit and the business related portion obtained via a log book is required to be taken into consideration.

As an example, if a vehicle was purchased for a $100,000 with an 80% work related percentage the depreciation would be calculated as follows:

  • $57.581 x 80% = $46,064.80

For businesses that are GST registered the GST components would also need to be calculated on the same basis:

  • Depreciation - $52,346.36 x 80% = $41,877.09 (GST exclusive amounts)

  • GST - $5,234.64 x 80% = $4,187.71

AN ASSET THAT EXCEEDS THRESHOLD

Businesses that are utilising the simplified depreciation provisions, for assets where the cost is equal to or more than the eligible instant write-off threshold, the asset is required to be placed in a small business pool for depreciation purposes.

Please contact us if you have any queries or require any assistance.

From the team at Elevated Accounting

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