$30,000 Instant Asset Write-Off
From the 2012 financial year, small businesses (with an aggregated turnover less than AUD$10 million) have been able to claim an immediate tax deduction for business assets purchased under a certain value.
An asset receives an immediate deduction if its cost is less than the applicable threshold in the year the entity starts to use this asset, or this asset is installed ready for use. The deduction is limited to the taxable purpose proportion of the asset’s cost.
As per the below table, the threshold has changed over the last few years. The current threshold for the period from 2 April 2019 to 30 June 2020 is AUD$30,000.
| Purchase date or date asset first used (or installed ready for use) for a taxable purpose | Threshold |
| Before 2012/13 | $1,000 |
| From 2012/13 to 31 December 2013 | $6,500 |
| 1 January 2014 to 12 May 2015 (7:30pm AEST) | $1,000 |
| 12 May 2015 (7:30pm AEST) to 28 January 2019 | $20,000 |
| 29 January 2019 to 2 April 2019 (7:30pm AEDT) | $25,000 |
| 2 April 2019 (7:30pm AEDT) to 30 June 2020 | $30,000 |
Please note that the cost of the asset must be under AUD$30,000 threshold.
Example
Tom owns a construction business called Construction Solutions, which is a small business. The business purchased a van for AUD$33,000 including GST on 30 May 2019. Van will be used 100% for the business purposes.
Even though Construction Solutions is a GST registered company which is able to claim the input tax credit (GST credit) for the GST amount ($3,000) included in the price of a car from the Australian Taxation Office (ATO) and van will be used 100% for the business purposes, the price of a van is still above the under $30,000 threshold.
Please also be advised that from 1 July 2020, the threshold for the instant write-off asset will be reduced to AUD$1,000.
New Rules for Medium-Sized Businesses
Businesses with an aggregated annual turnover between AUD$10 million and AUD$50 million are also eligible for the instant asset write-off from 2 April 2019 to 30 June 2020. Previously, these businesses were obligated to calculate depreciation on the purchase of assets using the rules contained in Division 40 of the Income Tax Assessment 1997 Act.
Australian Taxation Office (ATO’s) Attack on Black Economy
The black economy is a significant economic issue affecting all of us, which refers to dishonest and criminal activities involving the misuse of the tax and regulatory systems. The Black Economy taskforce estimates that the black economy is costing the community around AUD$50 billion (around three percent of Gross Domestic Product). The ATO is committed to undertaking the necessary actions against the black economy and creating the equal rules for all the taxpayers respectively. One of the ATO’s actions against the black economy is visiting small businesses across the country during the next financial year. The ATO’s action already started in the Northern Territory. Currently, the ATO’s officers are visiting the small businesses in Katherine, Batchelor, Bees Creek, Adelaide River and Pine Creek. Up to 200 small businesses in the Northern Territory can expect a visit from the ATO. During the next financial year, the ATO is expecting to visit about 10,000 small businesses around the country.
