Claiming the Instant Asset Write-Off of up to $150,000
One of the best tax breaks for small to medium sized business is the instant asset write-off, which is a great way for businesses to acquire capital assets and obtain an immediate tax deduction.
As part of the Federal Government’s recent Coronavirus Stimulus Package, the Instant Asset Write-Off threshold has increased from $30,000 to $150,000 [net of GST] per asset acquired.
This measure will apply to all purchases made from 12 March 2020 to 30 June 2020 where the assets are used, or installed ready for use, in the business by 30 June 2020.
Examples of tax-deductible items;
Some of the items that you could look at purchasing before 30 June 2020 include:
- Cash registers and other POS devices
- Cars, vans and utes
- Fittings and fixtures
- Plant and machinery
- Computers and laptops
- Security systems
Key tips for making the most of the Instant Asset Write-Off;
- You have to be in business to claim the Instant Asset Write-Off – having an ABN is not enough
- Both new and second-hand assets qualify.
- This tax break is not a cash hand-out, but a deduction that reduces your taxable profit. If you operate as a company and spend, say, $40,000 on a capital purchase [net of GST], then assuming a tax rate of 27.5 percent, the company will receive a 27.5% deduction, which equates to a $11,000 reduction in tax. This means that the company will still have a net cash outlay of $29,000 on this purchase.
- The $150,000 limit is worked out on a GST-exclusive basis. This means that if your business is registered for GST and claims an input tax credit on the purchase, the tax deduction is worked out net of GST.
- Your business may purchase and claim a deduction for each asset that costs less than the $150,000 threshold. For example, on 16 April 2020 your business purchased a piece of machinery costing $50,000 [net of GST] and then prior to 30 June 2020 purchases a new car costing $40,000 [net of GST]. The business can claim both of these as each of the assets as an immediate tax deduction in the 2019/20 year as both assets cost under the $150,000 threshold.
- The asset must be used, or installed ready for use by 30 June 2020. This is particularly important if the business purchases the asset just before the end of the financial year.
- Don’t forget to pro-rate the deduction for private use – to claim the full deduction, the asset has to be used solely for business purposes. If you operate as a sole trader or in a partnership and there has been some personal use of the asset, the deduction needs to be pro-rated to reflect this.
- The immediate deduction for a car cannot exceed the cost limit of $57,581 for the 2019/20 year
Unsecured Business Finance up to $250,000 [Available until 30/09/20]
As part of the Government’s Coronavirus SME Guarantee Scheme, we’re able to provide businesses access to working capital solutions up to $250,000.
All facilities are unsecured with no repayments for 6 months [interest capitalised] and loan terms up to 3 years – giving business owners choice, certainty, and access to capital during this period.
What you can use the funds for;
- Asset purchases
- Pay invoices, rent and operating expenditure
- Pay staff wages
- Purchase stock and inventory
Working Capital Facility
Revolving facility, only pay interest for what you use after 6 months
Can be linked to any business transaction account
Only one annual fee of $395
Receive a lump sum payment with an option for redraw available
No penalties for early repayment
Terms up to 3 years
One lump sum payment made directly to your account
Redraw option is available
Terms up to 3 years
What you need to apply;
- An ABN registered for at least 12 months
- Minimum annual turnover of $100,000
- Minimum Equifax score of 500
>> For more details or to apply visit XpressBusinessLoans.com.au
Instant Asset Write-Off + Unsecured Business Loan
Short on funds to purchase that asset you need?
You could use an unsecured business loan to purchase a qualifying asset for your business prior to June 30. That way you can get the benefit of the instant tax asset write-off [immediate tax deduction] in this 19/20 financial year without needing to pay anything for 6 months.
Note: We recommend you always speak to your trusted Accountant before making any tax related business decisions.
For more details email us or call 08 8451 1500 any time – we’re here to help!
Sam, Matt & Andy
>> See all of our best home loan rates here + a lot more…
PS. COVID-19 Lending Guide – We’ve put together a simple resource to let you know of all the core lender changes and initiatives in response to COVID-19, along with a range of financial options and strategies for getting through this difficult time. To access this info click here