How to take advantage of the Immediate Asset Write-off for Small Business Entities

For Small Business Entities (SBEs) who purchased equipment during the 2017 financial year and will do so in this 2018 financial year, here are a few tips to be aware of:

  • Am SBE can access the SBE depreciation concessions and claim an immediate write-off for assets which cost less than $20,000. To claim this, you need to satisfy the following:
  1. 1. You are a SBE if your aggregated turnover is less than $10 million.
  2. 2. The asset needs to be either ‘first used’ or ‘installed and ready for use’ for a taxable purpose by 30 June 2018.
  • The $20,000 threshold is applied on a GST-exclusive amount. (For example, if the asset is $21,000 inclusive of GST, the GST-exclusive amount will be $19,091, which is below $20,000 threshold. Therefore, this asset is eligible for an immediate write-off deduction.)
  • You cannot claim an immediate asset write-off for an asset that costs $20,000 or more even though the business usage of the asset is below $20,000 (For example you purchase an asset for $30,000 but you use 50% for business purposes only which makes the business portion value $15,000 This cannot be immediately written off).
  • To make use of the immediate asset write-off, the cost of asset needs to be incurred on or after 12 May 2015 up to 30 June 2018. Any assets purchased after this date will only be eligible for an immediate write-off, if the cost of asset is below $1,000.
  • When the asset you purchased is more than $20,000, it can be allocated to the general pool. It will be depreciated at 15% in the first year and 30% for the following income years.
  • If the SBE has a low value pool with an opening balance as at 1 July 2016 of less than $20,000, this opening balance can be immediately written-off during the 2017 income year.

Please feel free to contact one of our accountants for further details regarding depreciation for SBEs. If you need assistance with financing for asset purchases, please contact Leaf Lending Solutions.

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