As part of its initiative for "growing jobs and small business", the Federal Government announced a new provision in the May 2015 Budget to temporarily replace the previous instant asset write-off threshold of $1,000 to $20,000

What is this temporary provision?

Small businesses can claim an immediate deduction for the cost of each and every eligible depreciating asset¹ that they:

1. Purchase outright for less than $20,000² between 7.30pm (AEST) 12 May 2015 and 30 June 2017 (inclusive);

2. Start to use or have installed ready for use in the financial year when the claim for the deduction is being made; and

3.Purchase as new or second-hand.

Small businesses can also claim an immediate deduction where their low pool balance is less than $20,000 at the end of an income year that ends on or after 12 May 2015, and on or before 30 June 2017.

¹ Small number of assets (even if less than $20,000) also excluded from this provision as they are subject to different depreciation treatments (eg. Horticultural plants, capital works).

² Assets that cost $20,000 or more cannot be immediately deducted under this provision but are to be deducted over time using the general small business pool – 15% in the first income year with a diminishing value rate of 30% for each income year thereafter.

Who is eligible?

Any business that meets the definition of a "small business entity", that is a sole trader, partnership, company or trust that:

1. Operates a business for all or part of the income year; and

2. Has an aggregated turnover of less than $2 million.

How to claim the deduction

1. Ensure you meet the definition of a "small business entity";

2. Purchase an eligible asset for use (or have installed ready for use) by 30 June 2016 and 30 June 2017;

3. Retain the relevant supporting documents and claim deduction for full cost of asset in your income tax return for the relevant financial year.

The team at Kidmans Partners can help you to assess your eligibility and claim the relevant deductions in your income tax return, so for further details, please contact us via manish@kidmanspartners.com.au.


Disclaimer: this information is of a general nature and should not be viewed as representing financial advice. Users of this information are encouraged to seek further advice if they are unclear as to the meaning of anything contained in this article. Kidmans Partners accepts no responsibility for any loss suffered as a result of any party using or relying on this article.