Instant Asset Write-off


HOW DOES THE GOVERNMENT'S INSTANT ASSET WRITE OFF WORK?

2021/2022 Instant Asset Write Off

The $150,000 Instant Asset Write-Off provides businesses with an asset write-off. Assets must cost less than the instant asset write-off threshold and be purchased and used in the year that the write-off is claimed.

What can the Instant asset write-off can be used for:

  • Multiple assets, if the cost of each individual asset is less than the relevant threshold
  • New and second-hand assets.

Eligibility

Eligibility to use instant asset write-off on an asset depends on:

  • your aggregated turnover (the total ordinary income of your business and that of any associated businesses)
  • the date you purchased the asset
  • when it was first used or installed ready for use
  • the cost of the asset being less than the write-off threshold.

How does it work?

The below is an example of how the instant asset write-off can be used to reduce taxable income.

  • A small business has a turnover of $450,000 and a net taxable income of $90,000. The company pays the current Australian company tax rate of 25%.
  • The total tax payable is $22,500 (0.25 x $90,000).
  • Under the instant asset write-off scheme, the company purchases $30,000 of eligible assets during the financial year. The total value of the assets is deducted from the net taxable income to reduce the sum to $60,000.
  • As a result of the instant asset write-off scheme, the total tax payable is reduced to $15,000 (0.25 x $60,000).
  • Claiming deductions under the scheme, the tax saving would be $7,500 ($30,000 less $22,500).
  • With the savings included, the real cost to the company of purchasing the assets is $22,500 ($30,000 less the $7,500 tax saving).

How do you apply?

There is no application required. The write-off is applied when you lodge your tax for the relevant year. Make sure you keep all the purchase documentation you need to prove your purchase.

More Information

For more information please refer to ato.gov.au and business.gov.au.


JOIN OUR COMMUNITY

x