Instant Asset Write Off Changes

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.



Natasa Briffa