With the instant asset write off scheme set to expire on 30 June 2023, business owners have very little time left to purchase assets to claim the full deduction this financial year.
What is the instant asset write-off?
The instant asset write-off is a tax deduction that allows businesses to claim an immediate deduction for the cost of eligible assets, up to a certain threshold.
This means that if your business has purchased any eligible assets such as vehicles, machinery or office equipment, costing less than $150,000, you may be able to claim an immediate deduction for the full cost of the asset in your tax return for the current financial year. This can provide a significant boost to your cash flow and help to offset the cost of the asset.
It’s worth noting that not all assets are eligible for the instant asset write-off. The ATO has specific rules around what can and can’t be claimed, and businesses need to ensure that they meet these requirements before making any claims. If you’re planning on purchasing an asset to take advantage of the instant asset write-off scheme, we highly recommend speaking to one of our accountants before you purchase to ensure all eligibility criteria are met.
Your new asset must be in the business and in use by 30 June
To claim the instant asset write off the asset must be used in the business, it must be new, or can be second-hand as long as it has not previously been used by the business, and it must be installed and ready for use before 30 June.
With supply chain issues being ever-present and problematic, some larger assets such as cars, factory equipment, large farm machinery, etc. are taking over six months to arrive. You need to be confident the asset will definitely be in the business, on site, and in use by 30 June or you cannot claim it.
You can 'save' the deduction for future tax years…
It’s important to remember you don’t have to use the instant asset write off now – you can save the depreciation for when it’s essential.
If you’re going through a tough period and the business performance is below average, you can save the depreciation for future tax years. This will help to reduce your tax bill when you need it most.
Seeking professional advice on whether you should be taking it now will be essential. Our team can help you assess your position and plan for the best use of the depreciation and subsequent tax savings.
How can Walsh Accountant help?
Our team of accountants understand all the eligibility criteria for the instant asset write-off scheme and will be able to assist you to capitalise to create tax savings for your business. They can also help you understand how to best use your deductions – whether that be this financial year as an instant write off, or to save them for future tax years.
Time is of the essence! If you want to purchase an asset for your business, contact us as soon as possible to speak to one of our accountants.