The ATO recently announced an extension to the $150,000 Instant Asset Write-Off, up until 31 December 2020. The write-off allows businesses to write off any asset up to the value of $150,000 as an immediate deduction instead of depreciating it.
As a rule, if an asset is valued at more than $1,000 it would need to be depreciated over its life. However, due to this write-off, any asset that is installed and ready for use as at 30 June 2020 can be claimed as an immediate write-off in your 2019/20 Tax Return. This applies mainly to machinery, tools and equipment. Capital items such as a shed, concrete driveway, mezzanine still need to be depreciated at 2.5% and can’t be claimed as an immediate write-off.
So what if you purchase a vehicle, say a BMW, through the Instant Asset write-off, and use it from time to time for personal use? It’s a little more complicated than it might immediately seem. We’ve put together this reference image to help illustrate the factors for you to consider:
What to do now?
If you are looking to purchase a vehicle through your business that is not a 100% commercial vehicle, we would encourage you to speak to your accountant as soon as possible. That way you won’t miss out on the Instant Asset write-off, and they can work with you to make sure you don’t incur FBT.