The Australian Government is taking additional steps to help businesses get back on their feet as we make our way out of the COVID-19 bubble. In March this year, the Government announced an increase to the threshold of the instant asset write-off from $30,000 to $150,000. The government has also extended this scheme to businesses with a turnover of up to $500 million a year, from the initial $50 million. There are hopes that these changes will help businesses navigate the aftermath of the pandemic and boost cash flow.
The cut-off date for making claims, which was 30th June, has now been extended to 31st December 2020. The extension will be available to an estimated 3.5 million businesses and is set to cost approximately $300 million over the next four years. Without the extension, the instant asset write-off would have reverted from $150,000 to the $1,000 threshold and would only be eligible for small businesses with a turnover of less than $10 million, Accountants Daily reports.
Treasurer, Josh Frydenberg, said that these measures were implemented to provide additional support to encourage companies to continue with the investments they had planned. Bringing these investments forward will also support economic growth over the coming months. The extension will give businesses the time they need to acquire and install assets that weren’t possible during the coronavirus lockdown.
Does this mean I can buy anything I want?
While you can now claim new or used assets up to $150,000 each, the write-off scheme is only available where the asset is used for business purposes. These assets are not only limited to equipment. You can purchase vehicles, trucks, and trailers; or office equipment like computers and furniture. Remember that not every expenditure may qualify, so you will need to obtain professional advice before proceeding with any purchases.
What about purchases above $150,000?
For expenditures above the limit, it is recommended that you speak to your tax advisor. You may be eligible for the new 15-month investment incentive, which permits a 50% deduction of the cost of the new equipment. For more information on this, visit the Australian Taxation Office website.
Do I qualify if my equipment was purchased using a loan?
If you have the title to the goods using a chattel mortgage or equipment loan, then you may be eligible to claim a deduction. Commonwealth Bank states that you can use the same financial provider to purchase several assets and claim their deductions, provided that each item costs less than the threshold amount.
By financing your purchase, you can structure the term and repayments to support your cashflow. EWIB’s trusted partner, FutureNow Finance, has access to commercial lenders and is able to help you with asset finance solutions to suit your business. You can call 1300 013 730 or email email@example.com
If you are looking to take advantage of the instant asset write-off extension and invest in new equipment, then you should also consider protecting these assets with suitable insurance cover. If you already have insurance in place, then you may want to update your current cover to ensure all your items are included in your policy. Get in touch with the team at East West Insurance Brokers and we will personally work with you to tailor a package that fits your business.
Important Note: All insurance policies have exclusions. Please refer to the Product Disclosure Statement or Policy Wording to decide whether an insurance policy meets your needs.