Many of you may not be aware the government changed the legislation regarding the instant asset write off as part of the budget. From 7.30pm (AEDT) on 6 October 2020 up until 30 June 2022, the government has announced that eligible businesses with a turnover under $5 billion will get an immediate tax deduction for the full cost of the asset.
This write off also applies to eligible second-hand assets and the outstanding balance of your general small business pool.
One thing you need to know before you head out and purchase a new motor vehicle is that the luxury car limit is still in place. If you purchase a motor vehicle that is designed to carry people and has a load of under one tonne then there is a limit of $59,136 for the 2020/2021 financial year.
For example, if you purchased a Ute for $65,000 in December 2020, you will not be able to claim the full amount of that Ute under the instant asset write off. As the limit is $59,136 you will only be able to claim the $59,136, the remainder of $5,864 will have to sit on the Balance Sheet as an asset until you either scrap the motor vehicle or sell it.