Business Assets: Immediate tax deductions

Printer Services Newsletter 9.1

Business Assets: Immediate tax deductions

As we head into April, end of financial year is only three months away so don't forget to take advantage of the immediate tax deductions up to $20,000 on asset purchases for your business.

Immediate deductions up to $20,000

The $20,000 instant asset write-off has been extended to 30 June 2019

This means you can continue to claim the cost of new or second-hand assets that are less than the threshold of $20,000. What does it mean for your business?

If your business has a turnover of less than $10 million, you can instantly claim the business portion of most depreciating assets that cost less than $20,000 each.

You can claim the deduction through your tax return, in the year the asset was first bought and used or installed ready for use.

Assets of $20,000 or more can be put into a small business asset pool where you can claim a proportion of the amount as a deduction each year.

On 29 January 2019, the Prime Minister announced that the government will introduce legislation to increase the $20,000 instant asset write-off threshold to $25,000 from 29 January 2019 until 30 June 2020. This proposal is not yet law.

Example: Immediate write-off

On 18 May 2018 Fiona buys a new powerful computer for $6,800 that she uses 80% of the time for business purposes and 20% of the time for personal purposes. She also bought a new printer for $700 which she uses for 100% of the time for business purposes.

For the computer, Fiona calculates her instant asset write-off as 80% (the business use proportion) of $6,800, so she claims $5,440.

For the printer, she claims the entire cost of $700.

Fiona includes the combined amount of $6,140 at label A of the Business and professional items schedule which is filled out when completing her tax return.