Instant Asset Write Off

After a number of years of stagnation at best in many industries in Western Australia, now may be a time for thinking about the future landscape and how we position ourselves as business owners for any potential uplift in the economy. Organisations with assets that may have been sitting idle for a long period of time, or simply businesses that haven’t had the financial resources available to replace assets which have been utilized long after their normal expected useful life may now wish to look at replacing those assets.

If you are able, now is the time to do so. The Instant Asset Write Off Scheme implemented by the ATO originally gave small businesses the opportunity to write off the asset in the period of purchase, with a few requirements to do so highlighted below.

Even better, is that the assets you purchase aren’t aggregated up to the $30k, but are taken as individual assets. This means that, should you have the financial resources available, you can purchase two assets at $25k each and both can be charged to the P&L in the year of purchase.

One major point of note is that on 1 July 2020, the $30k limit reverts to $1k and so, as it currently stands, organisations have just under six months to get the assets purchased and in place in order to benefit. The following are some of the criteria in order to claim the asset write off:

Be a small business per the requirement of the ATO
The total cost of the asset must cost less than the $30k limit. Be careful of GST as if you are not registered, it is the GST inclusive cost that is applicable. Therefore a $29k plus GST asset falls above the threshold.
The asset must be purchased and used in the year that the write off is claimed.
Depending upon the asset, lead times must be taken into account for both manufacture and commissioning, and in the current climate, the securing of funding for those who don’t have cash reserves available for use can take time, so it is important to leave sufficient time to get the process completed by 30 June 2020.