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How to leverage the $150k business tax write-off


Businesses looking to invest in their operations have more opportunity to do so, with the expanded instant asset write-off scheme still available.

In March, the federal government increased the Instant Asset Write-Off from $30,000 to $150,000.

And in positive news for small business owners, the scheme that was planned to end on the 31st of December 2020, has been further extended until 30th of June 2021.

This tax break, available for small and medium businesses who have an annual turnover of less than $500 million, allows SMEs to deduct equipment, vehicles or other capital items priced up to $150,000 immediately.

As a small business, this means you still have a limited amount of time to make use of this tax write-off!

What can you buy?

With this scheme still in play, business owners can benefit from the instant asset write-off that allows them to immediately deduct asset purchases of up to $150,000. This can help you to buy more equipment and other assets that will help you become more efficient and effective in business.

Any assets bought (totalling up to $150,000), regardless of whether they are new or second-hand, can be written off in the same financial year following simplified depreciation.

The $150,000 write-off can apply to assets such as vehicles, computer and office equipment, earthmoving and construction equipment, equipment and machinery, light and heavy commercial vehicles, manufacturing and industrial equipment and medical and dental equipment. Businesses can also benefit from the instant asset write-off multiple times, however, it’s important to note that if the item is also for personal use, you must apportion that amount and deduct it from your claim.

For instance, if you buy a work vehicle that costs $24,000, and you intend to use it for 50% work purposes and 50% personal purposes, then you can claim $12,000 as a tax deduction. Under this scheme, you can claim it immediately in this year’s tax return – provided you buy it prior to 30 June.

What are the eligibility criteria?

To be eligible you must:

  • be in business and hold an Australian Business Number (ABN);
  • have an aggregate turnover of less than $500 million;
  • have purchased and installed the asset in the year the write-off is claimed; and
  • ensure the cost of the asset is less than the threshold.

Navigating businesses taxes and purchases can be confusing, especially when it comes to leveraging these types of tax incentives. If you’re looking to find some greater clarity around how to leverage this powerful opportunity for your business, the team at Morris Finance can discuss options for financing your latest purchase, to maximise cash flow and profitability.

Contact one of our finance specialists today on 03 5223 3453 and let us help you make sense of it!


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