March 2019
Changes to the small business instant asset write-off
On 29 January 2019, the Prime Minister announced that legislation will be introduced to:
- extend the small business instant asset write-off by 12 months to 30 June 2020; and
- increase the write-off threshold from less than $20,000 to less than $25,000 (effective immediately).
The current threshold of $20,000 has applied since 7.30pm AEST on 12 May 2015 and was due to revert to $1,000 on 1 July 2019. Under the proposed changes, from 29 January 2019 until 30 June 2020, small businesses with an aggregated annual turnover of less than $10 million may claim an immediate deduction for the business-use portion of each depreciating asset costing less than $25,000.
Example:
To illustrate, assume an individual acquires a van for $22,000 (excluding GST entitlements) on 1 February 2019.
The individual is a small business entity and estimates the van will be used 90% for the business and 10% for private purposes.
Under the current rules, while the business-use portion of the cost of the van is less than $20,000 (i.e., $22,000 x 90% = $19,800), an immediate deduction is not available because the entire cost is $20,000 or more.
However, the van may be depreciated as part of the taxpayer's SBE small business pool.
In contrast, an immediate deduction of $19,800 may now be claimed under the proposed changes, as the entire cost of the van is below the new threshold of $25,000.
Also in this month's update:
- Tax scammer alert
- Non-compliant payments to workers
- What's new for Australian businesses including:
- The pending increase in the small business instant depreciating asset write-off to less than $25,000 (as discussed in further detail above).
- Accelerated depreciation deductions for primary producers for eligible fodder storage assets, as well as for fencing and water facilities.
- Assistance for primary producers impacted by drought at Drought Help, or by contacting the ATO on 1800 806 218 .
- A lower company tax rate of 27.5% for companies qualifying as a Base Rate Entity ('BRE') .
- Increased Small Business Income Tax Offset ('SBITO') for eligible sole traders and individual partners and beneficiaries .
If you have any questions, please do not hesitate to contact us .
