Let your business clients know about changes to the instant asset write-off. Plus, feel free to share our handy infographic which helps explain the cash flow benefit of accelerated depreciation.
There have been numerous announcements from the Australian Federal Government in recent months regarding the instant asset write-off. The latest, in early April, was an increase to the threshold of eligible assets to $30,000 and an extension of the scheme to 30 June 2020. There were also changes announced regarding the eligibility criteria, to now include businesses with turnover greater than $10 million.
Australian businesses are showing their support for the change, which is no surprise when you consider that over 350,000 businesses have already taken advantage of the scheme.
What exactly are the changes?
Businesses with an annual turnover of up to $10 million can claim an immediate tax deduction for the business portion of each asset (new or second hand) bought and first used or installed ready for use, up to the following thresholds:
- $30,000, from 7.30pm (AEDT) on 2 April 2019 until 30 June 2020
- $25,000, from 29 January 2019 until before 7.30pm (AEDT) on 2 April 2019
- $20,000, before 29 January 2019.
The latest announcement has also included larger businesses with annual turnover from $10 million to less than $50 million. These businesses can claim a deduction on eligible assets of up to $30,000 purchased and used, or installed ready for use, from 7:30pm (AEDT) on 2 April 2019 until 30 June 2020.
For individual assets greater than $30,000, your business clients will not be able to claim an immediate tax deduction under this scheme. They can continue to deduct these over time using the small business pool or the general depreciation rules, depending on their turnover. Advice should be sought from a tax professional.
What does this mean for your small business clients?
These changes will further improve the ability for small businesses to grow and invest in purchases to increase and stabilise their cash flow – something that we at OnDeck strongly support.
The below Infographic is a great tool to help your SME clients understand the cash flow benefit of accelerated depreciation, and how they can maximise opportunities through a small business loan.
In this example, a client takes a $29,500 loan and purchases and installs equipment on 1st May 2019. You can see the significant cash flow tax benefit from making use of the instant asset write-off, versus the tax payable when no equipment was purchased.
Feel free to share this infographic with your clients.
Looking for more information?
For further information on the Australian Government’s instant asset write-off scheme for small business, including up to date information on eligibility and the write-off threshold, refer the ATO website at: https://www.ato.gov.au/business/depreciation-and-capital-expenses-and-allowances/simpler-depreciation-for-small-business/
In all instances, we recommend that your clients seek advice form their tax advisor regarding their eligibility under the scheme, and how it will impact their business.