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By Christina Cotter
Small Business Month: Tips for Claiming the Instant Asset Write-Off
What is the Instant Asset Write Off?
Under the instant asset write-off, eligible businesses can claim an immediate deduction for the business portion of the cost of an asset in the year the asset is first used or installed ready for use.
Instant asset write-off can be used for:
Eligibility to use instant asset write-off on an asset depends on:
From 12 March 2020 until 31 December 2020 the instant asset write-off threshold amount for each asset is $150,000 excluding GST (up from $30,000).
However, on 6 October 2020, as part of the 2020–21 Budget, the government announced that it will target support to businesses and encourage new investment, in part through a temporary full expensing incentive. Eligible businesses with an aggregated turnover of less than $5 billion will be able to deduct the full cost of new eligible depreciating assets that are first held, and first used or installed ready for use for a taxable purpose, between 6 October 2020 and 30 June 2022.
Tips for claiming the Instant Asset Write Off
For example, if a company spent $50,000 (excluding GST) on a piece of equipment, then assuming a tax rate of 27.5 percent, the company will receive a $13,750 reduction in tax.
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