Instant Asset Write Off


This is an update just released by the Tax Office that relates to small business with sales under 2 million.

There is a draft Bill currently under debate in Federal Parliament which seeks to repeal the $6,500 instant asset write off, as well as the $5,000 accelerated motor vehicle deduction. It seems likely that this Bill will
be passed. The proposed repeal date in the Bill is 1 January 2014.

This means that assets purchased after this date will not have the benefit of the $6,500 instant write off, nor the $5,000 accelerated deduction. Small business taxpayers should consider acquiring assets that
would benefit from the $6,500 threshold before 1 January 2014.

Proposed amendments will, if passed, reduce the instant asset write off back to $1,000. Therefore, if a business needs to purchase an asset which costs under $1,000, there is no urgency to purchase the asset prior to 1 January 2014. For example, an iPad which costs $900 can be purchased at any time prior to 1 January 2014 or at a later date, and can be still claimed as a full tax deduction. In comparison, if a computer which costs $3,000 is purchased prior to 1 January 2014, it can be written off 100% immediately, however if it is purchased after 1 January 2014, it will be depreciated at 15% in the first year, and 30% thereafter.

It is important to note that such assets must be used or installed ready for use, prior to 1 January 2014. It is not sufficient to enter into a contract prior to 1 January 2014 and take delivery after this date.
If you have any queries or wish to discuss this further, please do not hesitate to contact me.