Small Business Instant Asset Write Off

$20,000, $25,000 or $30,000

In this financial year, 1st July 2018 to 30th June 2019 there has been 3 different values at which you can write off the full cost of an asset. So which value applies to your purchase?

Up to 7.30pm (AEST) on the 28th January 2019, it is $20,000. Keep in mind the time of day because that is 7.30pm in Qld, 8.30pm in NSW and Vic, 8.00pm in SA and 5.30pm in WA.

Between 7.30pm (AEST) on the 28th January 2019 and 7.30pm (AEDT) 2nd of April 2019, the amount is $25,000 and after 7.30pm (AEDT) 2nd of April 2019, the amount is $30,000.

The time and dates are important, for the 2019 financial year, make sure that your receipts have the dates and dates on them and if you electronically check the time of the payment.

Who is Eligible for the Write Off

To be eligible for the Small Business Write Off you will need to be in business and your gross income can not exceed $10 million.

If Asset Greater then Threshold

If the cost of the asset is greater than the threshold the asset will be allocated to a general asset pool (a form of depreciation) wherein its first year in the pool it will be depreciated at 15% and any subsequent years will be depreciated at 30%.

The cost of the asset includes the purchase price of the asset, delivery and installation costs and any improvements to the asset.

The total cost of the asset excludes any trade-in value used to reduce the amount paid.

GST

The purchase price of the asset is net of GST if you are GST registered and if you are not GST registered then the total cost of the asset

Pooled amount less than Threshold

If the asset was greater than the appropriate thresholds and placed in the general asset pool. Once the item in the pool is less than the appropriate threshold it can be written off.

Personal Use

If the asset is proportioned for personal use, the total cost of the asset, not the proportioned amount is used to determine whether the asset is eligible for the small business write off.

When you Sell the Asset

When the asset is sold you may need to make an adjustment to your assessable income.

The Asset would have been added to the general pool, the sale amount is used to reduce the pool amount and if that amount is less than zero it will need to be included as assessable income

Example:
A motor vehicle is purchased for $20,000 and is the only asset in the pool. It is written off as a deduction and the general pool balance is now zero.
When the vehicle is sold for $10,000 the sale price then is taken from the zero balance.
As the pool’s balance is less than zero, the $10,000 is added to the business assessable income and taxed at the appropriate tax rate.

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